Correlation Between Hua Hong and Westgold Resources
Can any of the company-specific risk be diversified away by investing in both Hua Hong and Westgold Resources 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 Hua Hong and Westgold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hua Hong Semiconductor and Westgold Resources, you can compare the effects of market volatilities on Hua Hong and Westgold Resources 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 Hua Hong with a short position of Westgold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and Westgold Resources.
Diversification Opportunities for Hua Hong and Westgold Resources
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hua and Westgold is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and Westgold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westgold Resources and Hua Hong 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 Hua Hong Semiconductor are associated (or correlated) with Westgold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westgold Resources has no effect on the direction of Hua Hong i.e., Hua Hong and Westgold Resources go up and down completely randomly.
Pair Corralation between Hua Hong and Westgold Resources
Assuming the 90 days horizon Hua Hong Semiconductor is expected to generate 0.96 times more return on investment than Westgold Resources. However, Hua Hong Semiconductor is 1.04 times less risky than Westgold Resources. It trades about 0.12 of its potential returns per unit of risk. Westgold Resources is currently generating about -0.02 per unit of risk. If you would invest 272.00 in Hua Hong Semiconductor on October 26, 2024 and sell it today you would earn a total of 18.00 from holding Hua Hong Semiconductor or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Hua Hong Semiconductor vs. Westgold Resources
Performance |
| Timeline |
| Hua Hong Semiconductor |
| Westgold Resources |
Hua Hong and Westgold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Hong and Westgold Resources
The main advantage of trading using opposite Hua Hong and Westgold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Hong position performs unexpectedly, Westgold Resources 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 Westgold Resources will offset losses from the drop in Westgold Resources' long position.| Hua Hong vs. US Physical Therapy | Hua Hong vs. Xiwang Special Steel | Hua Hong vs. United States Steel | Hua Hong vs. OPKO HEALTH |
| Westgold Resources vs. DISTRICT METALS | Westgold Resources vs. HK Electric Investments | Westgold Resources vs. SIERRA METALS | Westgold Resources vs. Fortescue Metals Group |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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