Correlation Between China Longyuan and Huatian Hotel
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By analyzing existing cross correlation between China Longyuan Power and Huatian Hotel Group, you can compare the effects of market volatilities on China Longyuan and Huatian Hotel 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 Longyuan with a short position of Huatian Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Longyuan and Huatian Hotel.
Diversification Opportunities for China Longyuan and Huatian Hotel
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Huatian is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding China Longyuan Power and Huatian Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huatian Hotel Group and China Longyuan 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 Longyuan Power are associated (or correlated) with Huatian Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huatian Hotel Group has no effect on the direction of China Longyuan i.e., China Longyuan and Huatian Hotel go up and down completely randomly.
Pair Corralation between China Longyuan and Huatian Hotel
Assuming the 90 days trading horizon China Longyuan is expected to generate 1.34 times less return on investment than Huatian Hotel. In addition to that, China Longyuan is 1.02 times more volatile than Huatian Hotel Group. It trades about 0.08 of its total potential returns per unit of risk. Huatian Hotel Group is currently generating about 0.11 per unit of volatility. If you would invest 288.00 in Huatian Hotel Group on August 29, 2024 and sell it today you would earn a total of 54.00 from holding Huatian Hotel Group or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Longyuan Power vs. Huatian Hotel Group
Performance |
| Timeline |
| China Longyuan Power |
| Huatian Hotel Group |
China Longyuan and Huatian Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Longyuan and Huatian Hotel
The main advantage of trading using opposite China Longyuan and Huatian Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Longyuan position performs unexpectedly, Huatian Hotel 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 Huatian Hotel will offset losses from the drop in Huatian Hotel's long position.| China Longyuan vs. Industrial and Commercial | China Longyuan vs. Agricultural Bank of | China Longyuan vs. China Construction Bank | China Longyuan vs. Bank of China |
| Huatian Hotel vs. Agricultural Bank of | Huatian Hotel vs. Industrial and Commercial | Huatian Hotel vs. Bank of China | Huatian Hotel vs. China Construction Bank |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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