Correlation Between Cardano and Hua Hong

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

By analyzing existing cross correlation between Cardano and Hua Hong Semiconductor, you can compare the effects of market volatilities on Cardano and Hua Hong 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 Cardano with a short position of Hua Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Hua Hong.

Diversification Opportunities for Cardano and Hua Hong

-0.4

Correlation Coefficient

Cardano  Hua Hong

Very good diversification

The 3 months correlation between Cardano and Hua is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Hua Hong Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Hong Semiconductor and Cardano 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 Cardano are associated (or correlated) with Hua Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Hong Semiconductor has no effect on the direction of Cardano i.e., Cardano and Hua Hong go up and down completely randomly.

Pair Corralation between Cardano and Hua Hong

Assuming the 90 days trading horizon Cardano is expected to generate 1.32 times more return on investment than Hua Hong. However, Cardano is 1.32 times more volatile than Hua Hong Semiconductor. It trades about 0.11 of its potential returns per unit of risk. Hua Hong Semiconductor is currently generating about 0.04 per unit of risk. If you would invest  46.00  in Cardano on October 9, 2024 and sell it today you would earn a total of  55.00  from holding Cardano or generate 119.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	66.27%
Values	Daily Returns

Cardano  vs.  Hua Hong Semiconductor

Cardano

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cardano exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hua Hong Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hua Hong Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Cardano and Hua Hong

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

The idea behind Cardano and Hua Hong Semiconductor 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.