Correlation Between Zhuhai Comleader and HUAQIN TECHNOLOGY

Can any of the company-specific risk be diversified away by investing in both Zhuhai Comleader and HUAQIN 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 Zhuhai Comleader and HUAQIN TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhuhai Comleader Information and HUAQIN TECHNOLOGY LTD, you can compare the effects of market volatilities on Zhuhai Comleader and HUAQIN 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 Zhuhai Comleader with a short position of HUAQIN TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhuhai Comleader and HUAQIN TECHNOLOGY.

Diversification Opportunities for Zhuhai Comleader and HUAQIN TECHNOLOGY

-0.26

Correlation Coefficient

Zhuhai Comleader  HUAQIN TECHNOLOGY

Very good diversification

The 3 months correlation between Zhuhai and HUAQIN is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Zhuhai Comleader Information and HUAQIN TECHNOLOGY LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUAQIN TECHNOLOGY LTD and Zhuhai Comleader 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 Zhuhai Comleader Information are associated (or correlated) with HUAQIN TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUAQIN TECHNOLOGY LTD has no effect on the direction of Zhuhai Comleader i.e., Zhuhai Comleader and HUAQIN TECHNOLOGY go up and down completely randomly.

Pair Corralation between Zhuhai Comleader and HUAQIN TECHNOLOGY

Assuming the 90 days trading horizon Zhuhai Comleader Information is expected to under-perform the HUAQIN TECHNOLOGY. But the stock apears to be less risky and, when comparing its historical volatility, Zhuhai Comleader Information is 1.23 times less risky than HUAQIN TECHNOLOGY. The stock trades about -0.04 of its potential returns per unit of risk. The HUAQIN TECHNOLOGY LTD is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  6,283  in HUAQIN TECHNOLOGY LTD on December 4, 2024 and sell it today you would earn a total of  1,937  from holding HUAQIN TECHNOLOGY LTD or generate 30.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Zhuhai Comleader Information  vs.  HUAQIN TECHNOLOGY LTD

Zhuhai Comleader Inf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zhuhai Comleader Information 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.

HUAQIN TECHNOLOGY LTD

Risk-Adjusted Performance

Good

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

Pair Trading with Zhuhai Comleader and HUAQIN TECHNOLOGY

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

The idea behind Zhuhai Comleader Information and HUAQIN TECHNOLOGY LTD 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.