Correlation Between Hua Hong and ASX
Can any of the company-specific risk be diversified away by investing in both Hua Hong and ASX 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 ASX 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 ASX Limited, you can compare the effects of market volatilities on Hua Hong and ASX 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 ASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and ASX.
Diversification Opportunities for Hua Hong and ASX
Very good diversification
The 3 months correlation between Hua and ASX is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and ASX Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASX Limited 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 ASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASX Limited has no effect on the direction of Hua Hong i.e., Hua Hong and ASX go up and down completely randomly.
Pair Corralation between Hua Hong and ASX
Assuming the 90 days horizon Hua Hong Semiconductor is expected to generate 5.37 times more return on investment than ASX. However, Hua Hong is 5.37 times more volatile than ASX Limited. It trades about 0.12 of its potential returns per unit of risk. ASX Limited is currently generating about -0.21 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 | 100.0% |
| Values | Daily Returns |
Hua Hong Semiconductor vs. ASX Limited
Performance |
| Timeline |
| Hua Hong Semiconductor |
| ASX Limited |
Hua Hong and ASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Hong and ASX
The main advantage of trading using opposite Hua Hong and ASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Hong position performs unexpectedly, ASX 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 ASX will offset losses from the drop in ASX's 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 |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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