Correlation Between Hongrun Construction and China Satellite
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By analyzing existing cross correlation between Hongrun Construction Group and China Satellite Communications, you can compare the effects of market volatilities on Hongrun Construction and China Satellite 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 China Satellite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongrun Construction and China Satellite.
Diversification Opportunities for Hongrun Construction and China Satellite
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hongrun and China is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hongrun Construction Group and China Satellite Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Satellite Comm 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 China Satellite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Satellite Comm has no effect on the direction of Hongrun Construction i.e., Hongrun Construction and China Satellite go up and down completely randomly.
Pair Corralation between Hongrun Construction and China Satellite
Assuming the 90 days trading horizon Hongrun Construction is expected to generate 13.71 times less return on investment than China Satellite. But when comparing it to its historical volatility, Hongrun Construction Group is 1.57 times less risky than China Satellite. It trades about 0.01 of its potential returns per unit of risk. China Satellite Communications is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,246 in China Satellite Communications on November 9, 2024 and sell it today you would earn a total of 857.00 from holding China Satellite Communications or generate 68.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hongrun Construction Group vs. China Satellite Communications
Performance |
| Timeline |
| Hongrun Construction |
Risk-Adjusted Performance
OK
Weak | Strong |
| China Satellite Comm |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Hongrun Construction and China Satellite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hongrun Construction and China Satellite
The main advantage of trading using opposite Hongrun Construction and China Satellite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hongrun Construction position performs unexpectedly, China Satellite 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 China Satellite will offset losses from the drop in China Satellite's long position.The idea behind Hongrun Construction Group and China Satellite Communications 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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