Correlation Between CHINA HUARONG and Amundi Label

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

By analyzing existing cross correlation between CHINA HUARONG ENERHD 50 and Amundi Label Actions, you can compare the effects of market volatilities on CHINA HUARONG and Amundi Label 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 CHINA HUARONG with a short position of Amundi Label. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Amundi Label.

Diversification Opportunities for CHINA HUARONG and Amundi Label

-0.07

Correlation Coefficient

CHINA HUARONG  Amundi Label

Good diversification

The 3 months correlation between CHINA and Amundi is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Amundi Label Actions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Label Actions and CHINA HUARONG 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 CHINA HUARONG ENERHD 50 are associated (or correlated) with Amundi Label. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Label Actions has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Amundi Label go up and down completely randomly.

Pair Corralation between CHINA HUARONG and Amundi Label

Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 21.05 times more return on investment than Amundi Label. However, CHINA HUARONG is 21.05 times more volatile than Amundi Label Actions. It trades about 0.03 of its potential returns per unit of risk. Amundi Label Actions is currently generating about -0.01 per unit of risk. If you would invest  0.20  in CHINA HUARONG ENERHD 50 on October 4, 2024 and sell it today you would lose (0.05) from holding CHINA HUARONG ENERHD 50 or give up 25.0% of portfolio value over 90 days.

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

CHINA HUARONG ENERHD 50  vs.  Amundi Label Actions

CHINA HUARONG ENERHD

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA HUARONG ENERHD 50 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CHINA HUARONG reported solid returns over the last few months and may actually be approaching a breakup point.

Amundi Label Actions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi Label Actions has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Amundi Label is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CHINA HUARONG and Amundi Label

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

The idea behind CHINA HUARONG ENERHD 50 and Amundi Label Actions 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.