Correlation Between CHINA HUARONG and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and PennyMac Mortgage 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 PennyMac Mortgage 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 PennyMac Mortgage Investment, you can compare the effects of market volatilities on CHINA HUARONG and PennyMac Mortgage 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 PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and PennyMac Mortgage.
Diversification Opportunities for CHINA HUARONG and PennyMac Mortgage
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CHINA and PennyMac is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage 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 PennyMac Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennyMac Mortgage has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between CHINA HUARONG and PennyMac Mortgage
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 16.73 times more return on investment than PennyMac Mortgage. However, CHINA HUARONG is 16.73 times more volatile than PennyMac Mortgage Investment. It trades about 0.06 of its potential returns per unit of risk. PennyMac Mortgage Investment is currently generating about 0.12 per unit of risk. If you would invest 0.15 in CHINA HUARONG ENERHD 50 on December 2, 2024 and sell it today you would lose (0.05) from holding CHINA HUARONG ENERHD 50 or give up 33.33% 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. PennyMac Mortgage Investment
Performance |
Timeline |
CHINA HUARONG ENERHD |
PennyMac Mortgage |
CHINA HUARONG and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CHINA HUARONG and PennyMac Mortgage
The main advantage of trading using opposite CHINA HUARONG and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, PennyMac Mortgage 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 PennyMac Mortgage will offset losses from the drop in PennyMac Mortgage's long position.CHINA HUARONG vs. TITAN MACHINERY | CHINA HUARONG vs. FUYO GENERAL LEASE | CHINA HUARONG vs. Global Ship Lease | CHINA HUARONG vs. Daito Trust Construction |
PennyMac Mortgage vs. LI METAL P | PennyMac Mortgage vs. Nippon Light Metal | PennyMac Mortgage vs. East Africa Metals | PennyMac Mortgage vs. GREENX METALS LTD |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |