Correlation Between NetEase and HONEYWELL
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By analyzing existing cross correlation between NetEase and HONEYWELL INTERNATIONAL INC, you can compare the effects of market volatilities on NetEase and HONEYWELL 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 NetEase with a short position of HONEYWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetEase and HONEYWELL.
Diversification Opportunities for NetEase and HONEYWELL
Good diversification
The 3 months correlation between NetEase and HONEYWELL is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and NetEase 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 NetEase are associated (or correlated) with HONEYWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HONEYWELL INTERNATIONAL has no effect on the direction of NetEase i.e., NetEase and HONEYWELL go up and down completely randomly.
Pair Corralation between NetEase and HONEYWELL
Given the investment horizon of 90 days NetEase is expected to generate 23.66 times less return on investment than HONEYWELL. But when comparing it to its historical volatility, NetEase is 18.22 times less risky than HONEYWELL. It trades about 0.03 of its potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,941 in HONEYWELL INTERNATIONAL INC on September 23, 2024 and sell it today you would earn a total of 2.00 from holding HONEYWELL INTERNATIONAL INC or generate 0.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.99% |
Values | Daily Returns |
NetEase vs. HONEYWELL INTERNATIONAL INC
Performance |
Timeline |
NetEase |
HONEYWELL INTERNATIONAL |
NetEase and HONEYWELL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NetEase and HONEYWELL
The main advantage of trading using opposite NetEase and HONEYWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetEase position performs unexpectedly, HONEYWELL 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 HONEYWELL will offset losses from the drop in HONEYWELL's long position.The idea behind NetEase and HONEYWELL INTERNATIONAL INC 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.HONEYWELL vs. Xponential Fitness | HONEYWELL vs. Dave Busters Entertainment | HONEYWELL vs. RCS MediaGroup SpA | HONEYWELL vs. Lululemon Athletica |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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