Correlation Between Hangzhou Huawang and CSG Holding

Can any of the company-specific risk be diversified away by investing in both Hangzhou Huawang and CSG Holding 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 Hangzhou Huawang and CSG Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hangzhou Huawang New and CSG Holding Co, you can compare the effects of market volatilities on Hangzhou Huawang and CSG Holding 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 Hangzhou Huawang with a short position of CSG Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hangzhou Huawang and CSG Holding.

Diversification Opportunities for Hangzhou Huawang and CSG Holding

0.33

Correlation Coefficient

Hangzhou Huawang  CSG Holding

Weak diversification

The 3 months correlation between Hangzhou and CSG is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou Huawang New and CSG Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSG Holding and Hangzhou Huawang 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 Hangzhou Huawang New are associated (or correlated) with CSG Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSG Holding has no effect on the direction of Hangzhou Huawang i.e., Hangzhou Huawang and CSG Holding go up and down completely randomly.

Pair Corralation between Hangzhou Huawang and CSG Holding

Assuming the 90 days trading horizon Hangzhou Huawang New is expected to generate 1.69 times more return on investment than CSG Holding. However, Hangzhou Huawang is 1.69 times more volatile than CSG Holding Co. It trades about 0.04 of its potential returns per unit of risk. CSG Holding Co is currently generating about -0.07 per unit of risk. If you would invest  1,286  in Hangzhou Huawang New on September 27, 2024 and sell it today you would earn a total of  61.00  from holding Hangzhou Huawang New or generate 4.74% return on investment over 90 days.

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

Hangzhou Huawang New  vs.  CSG Holding Co

Hangzhou Huawang New

Risk-Adjusted Performance

3 of 100

Insignificant

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

CSG Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSG Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hangzhou Huawang and CSG Holding

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

The idea behind Hangzhou Huawang New and CSG Holding Co 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 Global Correlations module to find global opportunities by holding instruments from different markets.