Correlation Between Hua Hong and Aon PLC
Can any of the company-specific risk be diversified away by investing in both Hua Hong and Aon PLC 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 Aon PLC 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 Aon PLC, you can compare the effects of market volatilities on Hua Hong and Aon PLC 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 Aon PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and Aon PLC.
Diversification Opportunities for Hua Hong and Aon PLC
Good diversification
The 3 months correlation between Hua and Aon is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and Aon PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aon PLC 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 Aon PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aon PLC has no effect on the direction of Hua Hong i.e., Hua Hong and Aon PLC go up and down completely randomly.
Pair Corralation between Hua Hong and Aon PLC
Assuming the 90 days horizon Hua Hong Semiconductor is expected to generate 2.89 times more return on investment than Aon PLC. However, Hua Hong is 2.89 times more volatile than Aon PLC. It trades about 0.16 of its potential returns per unit of risk. Aon PLC is currently generating about -0.16 per unit of risk. If you would invest 250.00 in Hua Hong Semiconductor on October 28, 2024 and sell it today you would earn a total of 44.00 from holding Hua Hong Semiconductor or generate 17.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Hong Semiconductor vs. Aon PLC
Performance |
| Timeline |
| Hua Hong Semiconductor |
| Aon PLC |
Hua Hong and Aon PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Hong and Aon PLC
The main advantage of trading using opposite Hua Hong and Aon PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Hong position performs unexpectedly, Aon PLC 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 Aon PLC will offset losses from the drop in Aon PLC's long position.| Hua Hong vs. NVIDIA | Hua Hong vs. Taiwan Semiconductor Manufacturing | Hua Hong vs. Broadcom | Hua Hong vs. QUALCOMM Incorporated |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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