Correlation Between CHINA HUARONG and TRAVEL +

Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and TRAVEL + 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 TRAVEL + 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 TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on CHINA HUARONG and TRAVEL + 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 TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and TRAVEL +.

Diversification Opportunities for CHINA HUARONG and TRAVEL +

-0.55

Correlation Coefficient

CHINA HUARONG  TRAVEL +

Excellent diversification

The 3 months correlation between CHINA and TRAVEL is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and TRAVEL + go up and down completely randomly.

Pair Corralation between CHINA HUARONG and TRAVEL +

If you would invest  5,150  in TRAVEL LEISURE DL 01 on December 4, 2024 and sell it today you would earn a total of  150.00  from holding TRAVEL LEISURE DL 01 or generate 2.91% return on investment 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.  TRAVEL LEISURE DL 01

CHINA HUARONG ENERHD

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA HUARONG ENERHD 50 are ranked lower than 5 (%) 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.

TRAVEL LEISURE DL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, TRAVEL + is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CHINA HUARONG and TRAVEL +

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

The idea behind CHINA HUARONG ENERHD 50 and TRAVEL LEISURE DL 01 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.