Correlation Between Hai An and Song Hong
Can any of the company-specific risk be diversified away by investing in both Hai An and Song 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 Hai An and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hai An Transport and Song Hong Construction, you can compare the effects of market volatilities on Hai An and Song 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 Hai An with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hai An and Song Hong.
Diversification Opportunities for Hai An and Song Hong
Average diversification
The 3 months correlation between Hai and Song is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hai An Transport and Song Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Construction and Hai An 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 Hai An Transport are associated (or correlated) with Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Construction has no effect on the direction of Hai An i.e., Hai An and Song Hong go up and down completely randomly.
Pair Corralation between Hai An and Song Hong
Assuming the 90 days trading horizon Hai An Transport is expected to generate 0.8 times more return on investment than Song Hong. However, Hai An Transport is 1.25 times less risky than Song Hong. It trades about 0.1 of its potential returns per unit of risk. Song Hong Construction is currently generating about 0.04 per unit of risk. If you would invest 3,369,565 in Hai An Transport on October 12, 2024 and sell it today you would earn a total of 1,580,435 from holding Hai An Transport or generate 46.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 75.4% |
Values | Daily Returns |
Hai An Transport vs. Song Hong Construction
Performance |
Timeline |
Hai An Transport |
Song Hong Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Hai An and Song Hong Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hai An and Song Hong
The main advantage of trading using opposite Hai An and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hai An position performs unexpectedly, Song 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 Song Hong will offset losses from the drop in Song Hong's long position.Hai An vs. Petrolimex Information Technology | Hai An vs. Transport and Industry | Hai An vs. Fecon Mining JSC | Hai An vs. Song Hong Aluminum |
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Check out your portfolio center.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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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