Correlation Between Coor Service and Hua Hong

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

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

Diversification Opportunities for Coor Service and Hua Hong

0.48

Correlation Coefficient

Coor Service  Hua Hong

Very weak diversification

The 3 months correlation between Coor and Hua is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Coor Service Management 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 Coor Service 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 Coor Service Management 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 Coor Service i.e., Coor Service and Hua Hong go up and down completely randomly.

Pair Corralation between Coor Service and Hua Hong

Assuming the 90 days horizon Coor Service Management is expected to generate 2.2 times more return on investment than Hua Hong. However, Coor Service is 2.2 times more volatile than Hua Hong Semiconductor. It trades about 0.06 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  138.00  in Coor Service Management on October 9, 2024 and sell it today you would earn a total of  168.00  from holding Coor Service Management or generate 121.74% return on investment over 90 days.

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

Coor Service Management  vs.  Hua Hong Semiconductor

Coor Service Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coor Service Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 Coor Service and Hua Hong

The main advantage of trading using opposite Coor Service and Hua Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coor Service 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 Coor Service Management 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.