Correlation Between Zhongrun Resources and Huagong Tech
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By analyzing existing cross correlation between Zhongrun Resources Investment and Huagong Tech Co, you can compare the effects of market volatilities on Zhongrun Resources and Huagong Tech 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 Zhongrun Resources with a short position of Huagong Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongrun Resources and Huagong Tech.
Diversification Opportunities for Zhongrun Resources and Huagong Tech
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zhongrun and Huagong is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Zhongrun Resources Investment and Huagong Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huagong Tech and Zhongrun Resources 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 Zhongrun Resources Investment are associated (or correlated) with Huagong Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huagong Tech has no effect on the direction of Zhongrun Resources i.e., Zhongrun Resources and Huagong Tech go up and down completely randomly.
Pair Corralation between Zhongrun Resources and Huagong Tech
Assuming the 90 days trading horizon Zhongrun Resources is expected to generate 1.97 times less return on investment than Huagong Tech. In addition to that, Zhongrun Resources is 1.22 times more volatile than Huagong Tech Co. It trades about 0.03 of its total potential returns per unit of risk. Huagong Tech Co is currently generating about 0.06 per unit of volatility. If you would invest 1,866 in Huagong Tech Co on October 15, 2024 and sell it today you would earn a total of 1,931 from holding Huagong Tech Co or generate 103.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Zhongrun Resources Investment vs. Huagong Tech Co
Performance |
| Timeline |
| Zhongrun Resources |
| Huagong Tech |
Zhongrun Resources and Huagong Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhongrun Resources and Huagong Tech
The main advantage of trading using opposite Zhongrun Resources and Huagong Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongrun Resources position performs unexpectedly, Huagong Tech 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 Huagong Tech will offset losses from the drop in Huagong Tech's long position.The idea behind Zhongrun Resources Investment and Huagong Tech Co 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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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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