Correlation Between Harbin Hatou and China Marine

Can any of the company-specific risk be diversified away by investing in both Harbin Hatou and China Marine 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 China Marine 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 China Marine Information, you can compare the effects of market volatilities on Harbin Hatou and China Marine 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 China Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbin Hatou and China Marine.

Diversification Opportunities for Harbin Hatou and China Marine

0.41

Correlation Coefficient

Harbin Hatou  China Marine

Very weak diversification

The 3 months correlation between Harbin and China is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Harbin Hatou Investment and China Marine Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Marine Information 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 China Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Marine Information has no effect on the direction of Harbin Hatou i.e., Harbin Hatou and China Marine go up and down completely randomly.

Pair Corralation between Harbin Hatou and China Marine

Assuming the 90 days trading horizon Harbin Hatou Investment is expected to generate 0.95 times more return on investment than China Marine. However, Harbin Hatou Investment is 1.05 times less risky than China Marine. It trades about 0.01 of its potential returns per unit of risk. China Marine Information is currently generating about -0.02 per unit of risk. If you would invest  641.00  in Harbin Hatou Investment on October 9, 2024 and sell it today you would lose (14.00) from holding Harbin Hatou Investment or give up 2.18% of portfolio value over 90 days.

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

Harbin Hatou Investment  vs.  China Marine Information

Harbin Hatou Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harbin Hatou Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Harbin Hatou is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

China Marine Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Marine Information has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Marine is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harbin Hatou and China Marine

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

The idea behind Harbin Hatou Investment and China Marine Information 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.