Correlation Between CHINA HUARONG and BANK HANDLOWY
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY, you can compare the effects of market volatilities on CHINA HUARONG and BANK HANDLOWY 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 BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and BANK HANDLOWY.
Diversification Opportunities for CHINA HUARONG and BANK HANDLOWY
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CHINA and BANK is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and BANK HANDLOWY go up and down completely randomly.
Pair Corralation between CHINA HUARONG and BANK HANDLOWY
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 8.01 times more return on investment than BANK HANDLOWY. However, CHINA HUARONG is 8.01 times more volatile than BANK HANDLOWY. It trades about 0.11 of its potential returns per unit of risk. BANK HANDLOWY is currently generating about 0.08 per unit of risk. If you would invest 0.50 in CHINA HUARONG ENERHD 50 on December 4, 2024 and sell it today you would lose (0.40) from holding CHINA HUARONG ENERHD 50 or give up 80.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. BANK HANDLOWY
Performance |
Timeline |
CHINA HUARONG ENERHD |
BANK HANDLOWY |
CHINA HUARONG and BANK HANDLOWY Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CHINA HUARONG and BANK HANDLOWY
The main advantage of trading using opposite CHINA HUARONG and BANK HANDLOWY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, BANK HANDLOWY 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 BANK HANDLOWY will offset losses from the drop in BANK HANDLOWY's long position.CHINA HUARONG vs. EBRO FOODS | CHINA HUARONG vs. Molson Coors Beverage | CHINA HUARONG vs. United Natural Foods | CHINA HUARONG vs. MONEYSUPERMARKET |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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