Correlation Between Hua Hong and CAREER EDUCATION

Can any of the company-specific risk be diversified away by investing in both Hua Hong and CAREER EDUCATION at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hua Hong and CAREER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hua Hong Semiconductor and CAREER EDUCATION, you can compare the effects of market volatilities on Hua Hong and CAREER EDUCATION and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hua Hong with a short position of CAREER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and CAREER EDUCATION.

Diversification Opportunities for Hua Hong and CAREER EDUCATION

-0.43

Correlation Coefficient

Hua Hong  CAREER EDUCATION

Very good diversification

The 3 months correlation between Hua and CAREER is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER EDUCATION and Hua Hong is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hua Hong Semiconductor are associated (or correlated) with CAREER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAREER EDUCATION has no effect on the direction of Hua Hong i.e., Hua Hong and CAREER EDUCATION go up and down completely randomly.

Pair Corralation between Hua Hong and CAREER EDUCATION

Assuming the 90 days horizon Hua Hong is expected to generate 16.92 times less return on investment than CAREER EDUCATION. In addition to that, Hua Hong is 1.56 times more volatile than CAREER EDUCATION. It trades about 0.0 of its total potential returns per unit of risk. CAREER EDUCATION is currently generating about 0.07 per unit of volatility. If you would invest  1,261  in CAREER EDUCATION on October 10, 2024 and sell it today you would earn a total of  1,199  from holding CAREER EDUCATION or generate 95.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hua Hong Semiconductor  vs.  CAREER EDUCATION

Hua Hong Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hua Hong Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CAREER EDUCATION

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CAREER EDUCATION are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CAREER EDUCATION exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hua Hong and CAREER EDUCATION

The main advantage of trading using opposite Hua Hong and CAREER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Hong position performs unexpectedly, CAREER EDUCATION can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CAREER EDUCATION will offset losses from the drop in CAREER EDUCATION's long position.

The idea behind Hua Hong Semiconductor and CAREER EDUCATION pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.