Correlation Between Hanesbrands and China Finance

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

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

Diversification Opportunities for Hanesbrands and China Finance

0.17

Correlation Coefficient

Hanesbrands  China Finance

Average diversification

The 3 months correlation between Hanesbrands and China is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and China Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Finance and Hanesbrands 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 Hanesbrands are associated (or correlated) with China Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Finance has no effect on the direction of Hanesbrands i.e., Hanesbrands and China Finance go up and down completely randomly.

Pair Corralation between Hanesbrands and China Finance

If you would invest  0.00  in China Finance on December 27, 2024 and sell it today you would earn a total of  0.00  from holding China Finance or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Hanesbrands  vs.  China Finance

Hanesbrands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hanesbrands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

China Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, China Finance is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hanesbrands and China Finance

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

The idea behind Hanesbrands and China Finance 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.