Correlation Between Hua Hong and Japan Post
Can any of the company-specific risk be diversified away by investing in both Hua Hong and Japan Post 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 Japan Post 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 Japan Post Insurance, you can compare the effects of market volatilities on Hua Hong and Japan Post 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 Japan Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and Japan Post.
Diversification Opportunities for Hua Hong and Japan Post
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hua and Japan is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and Japan Post Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Post Insurance 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 Japan Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Post Insurance has no effect on the direction of Hua Hong i.e., Hua Hong and Japan Post go up and down completely randomly.
Pair Corralation between Hua Hong and Japan Post
Assuming the 90 days horizon Hua Hong Semiconductor is expected to generate 2.28 times more return on investment than Japan Post. However, Hua Hong is 2.28 times more volatile than Japan Post Insurance. It trades about 0.18 of its potential returns per unit of risk. Japan Post Insurance is currently generating about -0.19 per unit of risk. If you would invest 246.00 in Hua Hong Semiconductor on October 30, 2024 and sell it today you would earn a total of 48.00 from holding Hua Hong Semiconductor or generate 19.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Hong Semiconductor vs. Japan Post Insurance
Performance |
| Timeline |
| Hua Hong Semiconductor |
| Japan Post Insurance |
Hua Hong and Japan Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Hong and Japan Post
The main advantage of trading using opposite Hua Hong and Japan Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Hong position performs unexpectedly, Japan Post 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 Japan Post will offset losses from the drop in Japan Post's long position.| Hua Hong vs. Perseus Mining Limited | Hua Hong vs. Stag Industrial | Hua Hong vs. Compagnie Plastic Omnium | Hua Hong vs. Heidelberg Materials AG |
| Japan Post vs. MOVIE GAMES SA | Japan Post vs. GOLD ROAD RES | Japan Post vs. Scandinavian Tobacco Group | Japan Post vs. British American Tobacco |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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