Correlation Between Hua Hong and Diamyd Medical
Can any of the company-specific risk be diversified away by investing in both Hua Hong and Diamyd Medical 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 Diamyd Medical 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 Diamyd Medical AB, you can compare the effects of market volatilities on Hua Hong and Diamyd Medical 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 Diamyd Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and Diamyd Medical.
Diversification Opportunities for Hua Hong and Diamyd Medical
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hua and Diamyd is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and Diamyd Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamyd Medical AB 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 Diamyd Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamyd Medical AB has no effect on the direction of Hua Hong i.e., Hua Hong and Diamyd Medical go up and down completely randomly.
Pair Corralation between Hua Hong and Diamyd Medical
Assuming the 90 days horizon Hua Hong is expected to generate 1.08 times less return on investment than Diamyd Medical. But when comparing it to its historical volatility, Hua Hong Semiconductor is 1.01 times less risky than Diamyd Medical. It trades about 0.19 of its potential returns per unit of risk. Diamyd Medical AB is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 135.00 in Diamyd Medical AB on October 24, 2024 and sell it today you would earn a total of 17.00 from holding Diamyd Medical AB or generate 12.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Hong Semiconductor vs. Diamyd Medical AB
Performance |
| Timeline |
| Hua Hong Semiconductor |
| Diamyd Medical AB |
Hua Hong and Diamyd Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Hong and Diamyd Medical
The main advantage of trading using opposite Hua Hong and Diamyd Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Hong position performs unexpectedly, Diamyd Medical 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 Diamyd Medical will offset losses from the drop in Diamyd Medical's long position.| Hua Hong vs. NVIDIA | Hua Hong vs. NVIDIA | Hua Hong vs. Taiwan Semiconductor Manufacturing | Hua Hong vs. Broadcom |
| Diamyd Medical vs. NEWELL RUBBERMAID | Diamyd Medical vs. Compagnie Plastic Omnium | Diamyd Medical vs. THRACE PLASTICS | Diamyd Medical vs. Zoom Video Communications |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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