Correlation Between Carnival Industrial and Hotai
Can any of the company-specific risk be diversified away by investing in both Carnival Industrial and Hotai at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Carnival Industrial and Hotai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival Industrial Corp and Hotai Motor Co, you can compare the effects of market volatilities on Carnival Industrial and Hotai 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 Carnival Industrial with a short position of Hotai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Industrial and Hotai.
Diversification Opportunities for Carnival Industrial and Hotai
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Carnival and Hotai is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Industrial Corp and Hotai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Motor and Carnival Industrial 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 Carnival Industrial Corp are associated (or correlated) with Hotai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Motor has no effect on the direction of Carnival Industrial i.e., Carnival Industrial and Hotai go up and down completely randomly.
Pair Corralation between Carnival Industrial and Hotai
Assuming the 90 days trading horizon Carnival Industrial Corp is expected to generate 0.49 times more return on investment than Hotai. However, Carnival Industrial Corp is 2.06 times less risky than Hotai. It trades about -0.05 of its potential returns per unit of risk. Hotai Motor Co is currently generating about -0.17 per unit of risk. If you would invest 1,000.00 in Carnival Industrial Corp on September 1, 2024 and sell it today you would lose (7.00) from holding Carnival Industrial Corp or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Carnival Industrial Corp vs. Hotai Motor Co
Performance |
| Timeline |
| Carnival Industrial Corp |
| Hotai Motor |
Carnival Industrial and Hotai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival Industrial and Hotai
The main advantage of trading using opposite Carnival Industrial and Hotai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival Industrial position performs unexpectedly, Hotai 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 Hotai will offset losses from the drop in Hotai's long position.| Carnival Industrial vs. Chaintech Technology Corp | Carnival Industrial vs. AVerMedia Technologies | Carnival Industrial vs. Avision | Carnival Industrial vs. Clevo Co |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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