Correlation Between First Capital and Huadong Medicine
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By analyzing existing cross correlation between First Capital Securities and Huadong Medicine Co, you can compare the effects of market volatilities on First Capital and Huadong Medicine 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 First Capital with a short position of Huadong Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and Huadong Medicine.
Diversification Opportunities for First Capital and Huadong Medicine
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Huadong is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding First Capital Securities and Huadong Medicine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huadong Medicine and First Capital 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 First Capital Securities are associated (or correlated) with Huadong Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huadong Medicine has no effect on the direction of First Capital i.e., First Capital and Huadong Medicine go up and down completely randomly.
Pair Corralation between First Capital and Huadong Medicine
Assuming the 90 days trading horizon First Capital Securities is expected to under-perform the Huadong Medicine. In addition to that, First Capital is 1.5 times more volatile than Huadong Medicine Co. It trades about -0.47 of its total potential returns per unit of risk. Huadong Medicine Co is currently generating about -0.33 per unit of volatility. If you would invest 3,676 in Huadong Medicine Co on October 14, 2024 and sell it today you would lose (413.00) from holding Huadong Medicine Co or give up 11.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Capital Securities vs. Huadong Medicine Co
Performance |
| Timeline |
| First Capital Securities |
| Huadong Medicine |
First Capital and Huadong Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and Huadong Medicine
The main advantage of trading using opposite First Capital and Huadong Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, Huadong Medicine 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 Huadong Medicine will offset losses from the drop in Huadong Medicine's long position.| First Capital vs. COL Digital Publishing | First Capital vs. Zhejiang Publishing Media | First Capital vs. Northern United Publishing | First Capital vs. Chinese Universe Publishing |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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