Correlation Between Hongrun Construction and Guangdong Transtek
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By analyzing existing cross correlation between Hongrun Construction Group and Guangdong Transtek Medical, you can compare the effects of market volatilities on Hongrun Construction and Guangdong Transtek 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 Hongrun Construction with a short position of Guangdong Transtek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongrun Construction and Guangdong Transtek.
Diversification Opportunities for Hongrun Construction and Guangdong Transtek
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hongrun and Guangdong is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hongrun Construction Group and Guangdong Transtek Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Transtek and Hongrun Construction 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 Hongrun Construction Group are associated (or correlated) with Guangdong Transtek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Transtek has no effect on the direction of Hongrun Construction i.e., Hongrun Construction and Guangdong Transtek go up and down completely randomly.
Pair Corralation between Hongrun Construction and Guangdong Transtek
Assuming the 90 days trading horizon Hongrun Construction Group is expected to under-perform the Guangdong Transtek. But the stock apears to be less risky and, when comparing its historical volatility, Hongrun Construction Group is 1.43 times less risky than Guangdong Transtek. The stock trades about -0.01 of its potential returns per unit of risk. The Guangdong Transtek Medical is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,333 in Guangdong Transtek Medical on November 8, 2024 and sell it today you would earn a total of 43.00 from holding Guangdong Transtek Medical or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hongrun Construction Group vs. Guangdong Transtek Medical
Performance |
| Timeline |
| Hongrun Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Guangdong Transtek |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Hongrun Construction and Guangdong Transtek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hongrun Construction and Guangdong Transtek
The main advantage of trading using opposite Hongrun Construction and Guangdong Transtek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hongrun Construction position performs unexpectedly, Guangdong Transtek 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 Guangdong Transtek will offset losses from the drop in Guangdong Transtek's long position.The idea behind Hongrun Construction Group and Guangdong Transtek Medical 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.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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