Correlation Between Hua Hong and China Reinsurance
Can any of the company-specific risk be diversified away by investing in both Hua Hong and China Reinsurance 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 China Reinsurance 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 China Reinsurance, you can compare the effects of market volatilities on Hua Hong and China Reinsurance 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 China Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and China Reinsurance.
Diversification Opportunities for Hua Hong and China Reinsurance
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hua and China is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and China Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Reinsurance 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 China Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Reinsurance has no effect on the direction of Hua Hong i.e., Hua Hong and China Reinsurance go up and down completely randomly.
Pair Corralation between Hua Hong and China Reinsurance
Assuming the 90 days horizon Hua Hong Semiconductor is expected to generate 0.49 times more return on investment than China Reinsurance. However, Hua Hong Semiconductor is 2.03 times less risky than China Reinsurance. It trades about 0.18 of its potential returns per unit of risk. China Reinsurance is currently generating about 0.05 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Hong Semiconductor vs. China Reinsurance
Performance |
| Timeline |
| Hua Hong Semiconductor |
| China Reinsurance |
Hua Hong and China Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Hong and China Reinsurance
The main advantage of trading using opposite Hua Hong and China Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Hong position performs unexpectedly, China Reinsurance 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 China Reinsurance will offset losses from the drop in China Reinsurance'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 |
| China Reinsurance vs. Swiss Re AG | China Reinsurance vs. Reinsurance Group of | China Reinsurance vs. Superior Plus Corp | China Reinsurance vs. Origin Agritech |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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