Correlation Between Caitong Securities and Hunan TV

Can any of the company-specific risk be diversified away by investing in both Caitong Securities and Hunan TV 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 Caitong Securities and Hunan TV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caitong Securities Co and Hunan TV Broadcast, you can compare the effects of market volatilities on Caitong Securities and Hunan TV 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 Caitong Securities with a short position of Hunan TV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caitong Securities and Hunan TV.

Diversification Opportunities for Caitong Securities and Hunan TV

0.74

Correlation Coefficient

Caitong Securities  Hunan TV

Poor diversification

The 3 months correlation between Caitong and Hunan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Caitong Securities Co and Hunan TV Broadcast in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan TV Broadcast and Caitong Securities 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 Caitong Securities Co are associated (or correlated) with Hunan TV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan TV Broadcast has no effect on the direction of Caitong Securities i.e., Caitong Securities and Hunan TV go up and down completely randomly.

Pair Corralation between Caitong Securities and Hunan TV

Assuming the 90 days trading horizon Caitong Securities Co is expected to under-perform the Hunan TV. But the stock apears to be less risky and, when comparing its historical volatility, Caitong Securities Co is 1.75 times less risky than Hunan TV. The stock trades about -0.03 of its potential returns per unit of risk. The Hunan TV Broadcast is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  770.00  in Hunan TV Broadcast on September 20, 2024 and sell it today you would earn a total of  39.00  from holding Hunan TV Broadcast or generate 5.06% return on investment over 90 days.

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

Caitong Securities Co  vs.  Hunan TV Broadcast

Caitong Securities

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caitong Securities Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Caitong Securities sustained solid returns over the last few months and may actually be approaching a breakup point.

Hunan TV Broadcast

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hunan TV Broadcast are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hunan TV sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caitong Securities and Hunan TV

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

The idea behind Caitong Securities Co and Hunan TV Broadcast 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.