Correlation Between Hainan HNA and BOE Technology

Can any of the company-specific risk be diversified away by investing in both Hainan HNA and BOE Technology 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 Hainan HNA and BOE Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hainan HNA Infrastructure and BOE Technology Group, you can compare the effects of market volatilities on Hainan HNA and BOE Technology 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 Hainan HNA with a short position of BOE Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan HNA and BOE Technology.

Diversification Opportunities for Hainan HNA and BOE Technology

0.73

Correlation Coefficient

Hainan HNA  BOE Technology

Poor diversification

The 3 months correlation between Hainan and BOE is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hainan HNA Infrastructure and BOE Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOE Technology Group and Hainan HNA 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 Hainan HNA Infrastructure are associated (or correlated) with BOE Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOE Technology Group has no effect on the direction of Hainan HNA i.e., Hainan HNA and BOE Technology go up and down completely randomly.

Pair Corralation between Hainan HNA and BOE Technology

Assuming the 90 days trading horizon Hainan HNA is expected to generate 2.84 times less return on investment than BOE Technology. In addition to that, Hainan HNA is 2.84 times more volatile than BOE Technology Group. It trades about 0.02 of its total potential returns per unit of risk. BOE Technology Group is currently generating about 0.18 per unit of volatility. If you would invest  420.00  in BOE Technology Group on September 25, 2024 and sell it today you would earn a total of  16.00  from holding BOE Technology Group or generate 3.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Hainan HNA Infrastructure  vs.  BOE Technology Group

Hainan HNA Infrastructure

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hainan HNA Infrastructure are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hainan HNA sustained solid returns over the last few months and may actually be approaching a breakup point.

BOE Technology Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BOE Technology Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BOE Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hainan HNA and BOE Technology

The main advantage of trading using opposite Hainan HNA and BOE Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hainan HNA position performs unexpectedly, BOE Technology 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 BOE Technology will offset losses from the drop in BOE Technology's long position.

The idea behind Hainan HNA Infrastructure and BOE Technology Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.