Correlation Between Harbin Hatou and New Hope

Can any of the company-specific risk be diversified away by investing in both Harbin Hatou and New Hope 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 Harbin Hatou and New Hope into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Harbin Hatou Investment and New Hope Dairy, you can compare the effects of market volatilities on Harbin Hatou and New Hope 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 Harbin Hatou with a short position of New Hope. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbin Hatou and New Hope.

Diversification Opportunities for Harbin Hatou and New Hope

0.55

Correlation Coefficient

Harbin Hatou  New Hope

Very weak diversification

The 3 months correlation between Harbin and New is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Harbin Hatou Investment and New Hope Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hope Dairy and Harbin Hatou 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 Harbin Hatou Investment are associated (or correlated) with New Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hope Dairy has no effect on the direction of Harbin Hatou i.e., Harbin Hatou and New Hope go up and down completely randomly.

Pair Corralation between Harbin Hatou and New Hope

Assuming the 90 days trading horizon Harbin Hatou Investment is expected to under-perform the New Hope. In addition to that, Harbin Hatou is 1.07 times more volatile than New Hope Dairy. It trades about -0.11 of its total potential returns per unit of risk. New Hope Dairy is currently generating about 0.13 per unit of volatility. If you would invest  1,325  in New Hope Dairy on October 11, 2024 and sell it today you would earn a total of  220.00  from holding New Hope Dairy or generate 16.6% return on investment over 90 days.

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

Harbin Hatou Investment  vs.  New Hope Dairy

Harbin Hatou Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harbin Hatou Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harbin Hatou may actually be approaching a critical reversion point that can send shares even higher in February 2025.

New Hope Dairy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in New Hope Dairy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, New Hope sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harbin Hatou and New Hope

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

The idea behind Harbin Hatou Investment and New Hope Dairy 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.