Correlation Between Hubeiyichang Transportation and Huali Industrial
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By analyzing existing cross correlation between Hubeiyichang Transportation Group and Huali Industrial Group, you can compare the effects of market volatilities on Hubeiyichang Transportation and Huali Industrial 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 Hubeiyichang Transportation with a short position of Huali Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubeiyichang Transportation and Huali Industrial.
Diversification Opportunities for Hubeiyichang Transportation and Huali Industrial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hubeiyichang and Huali is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr and Huali Industrial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huali Industrial and Hubeiyichang Transportation 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 Hubeiyichang Transportation Group are associated (or correlated) with Huali Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huali Industrial has no effect on the direction of Hubeiyichang Transportation i.e., Hubeiyichang Transportation and Huali Industrial go up and down completely randomly.
Pair Corralation between Hubeiyichang Transportation and Huali Industrial
Assuming the 90 days trading horizon Hubeiyichang Transportation is expected to generate 2.53 times less return on investment than Huali Industrial. But when comparing it to its historical volatility, Hubeiyichang Transportation Group is 1.7 times less risky than Huali Industrial. It trades about 0.13 of its potential returns per unit of risk. Huali Industrial Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 6,679 in Huali Industrial Group on September 1, 2024 and sell it today you would earn a total of 702.00 from holding Huali Industrial Group or generate 10.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hubeiyichang Transportation Gr vs. Huali Industrial Group
Performance |
| Timeline |
| Hubeiyichang Transportation |
| Huali Industrial |
Hubeiyichang Transportation and Huali Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubeiyichang Transportation and Huali Industrial
The main advantage of trading using opposite Hubeiyichang Transportation and Huali Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubeiyichang Transportation position performs unexpectedly, Huali Industrial 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 Huali Industrial will offset losses from the drop in Huali Industrial's long position.The idea behind Hubeiyichang Transportation Group and Huali Industrial 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.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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