Correlation Between Hongrun Construction and Huitong Construction
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By analyzing existing cross correlation between Hongrun Construction Group and Huitong Construction Group, you can compare the effects of market volatilities on Hongrun Construction and Huitong Construction 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 Huitong Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongrun Construction and Huitong Construction.
Diversification Opportunities for Hongrun Construction and Huitong Construction
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hongrun and Huitong is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hongrun Construction Group and Huitong Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huitong Construction 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 Huitong Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huitong Construction has no effect on the direction of Hongrun Construction i.e., Hongrun Construction and Huitong Construction go up and down completely randomly.
Pair Corralation between Hongrun Construction and Huitong Construction
Assuming the 90 days trading horizon Hongrun Construction Group is expected to generate 0.77 times more return on investment than Huitong Construction. However, Hongrun Construction Group is 1.3 times less risky than Huitong Construction. It trades about 0.0 of its potential returns per unit of risk. Huitong Construction Group is currently generating about -0.01 per unit of risk. If you would invest 454.00 in Hongrun Construction Group on August 29, 2024 and sell it today you would lose (18.00) from holding Hongrun Construction Group or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hongrun Construction Group vs. Huitong Construction Group
Performance |
| Timeline |
| Hongrun Construction |
| Huitong Construction |
Hongrun Construction and Huitong Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hongrun Construction and Huitong Construction
The main advantage of trading using opposite Hongrun Construction and Huitong Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hongrun Construction position performs unexpectedly, Huitong Construction 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 Huitong Construction will offset losses from the drop in Huitong Construction's long position.| Hongrun Construction vs. PetroChina Co Ltd | Hongrun Construction vs. China State Construction | Hongrun Construction vs. China Mobile Limited | Hongrun Construction vs. Industrial and Commercial |
| Huitong Construction vs. PetroChina Co Ltd | Huitong Construction vs. China State Construction | Huitong Construction vs. China Mobile Limited | Huitong Construction vs. Industrial and Commercial |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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