Correlation Between Hongrun Construction and Namchow Food
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By analyzing existing cross correlation between Hongrun Construction Group and Namchow Food Group, you can compare the effects of market volatilities on Hongrun Construction and Namchow Food 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 Namchow Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongrun Construction and Namchow Food.
Diversification Opportunities for Hongrun Construction and Namchow Food
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hongrun and Namchow is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hongrun Construction Group and Namchow Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namchow Food Group 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 Namchow Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namchow Food Group has no effect on the direction of Hongrun Construction i.e., Hongrun Construction and Namchow Food go up and down completely randomly.
Pair Corralation between Hongrun Construction and Namchow Food
Assuming the 90 days trading horizon Hongrun Construction Group is expected to under-perform the Namchow Food. But the stock apears to be less risky and, when comparing its historical volatility, Hongrun Construction Group is 1.57 times less risky than Namchow Food. The stock trades about -0.06 of its potential returns per unit of risk. The Namchow Food Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,618 in Namchow Food Group on November 9, 2024 and sell it today you would earn a total of 63.00 from holding Namchow Food Group or generate 3.89% 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. Namchow Food Group
Performance |
| Timeline |
| Hongrun Construction |
Risk-Adjusted Performance
OK
Weak | Strong |
| Namchow Food Group |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Hongrun Construction and Namchow Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hongrun Construction and Namchow Food
The main advantage of trading using opposite Hongrun Construction and Namchow Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hongrun Construction position performs unexpectedly, Namchow Food 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 Namchow Food will offset losses from the drop in Namchow Food's long position.The idea behind Hongrun Construction Group and Namchow Food Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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