Correlation Between Hua Hong and Gold Road
Can any of the company-specific risk be diversified away by investing in both Hua Hong and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Hua Hong and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and Gold Road.
Diversification Opportunities for Hua Hong and Gold Road
Poor diversification
The 3 months correlation between Hua and Gold is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Hua Hong i.e., Hua Hong and Gold Road go up and down completely randomly.
Pair Corralation between Hua Hong and Gold Road
Assuming the 90 days horizon Hua Hong Semiconductor is expected to generate 1.95 times more return on investment than Gold Road. However, Hua Hong is 1.95 times more volatile than Gold Road Resources. It trades about 0.32 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.51 per unit of risk. If you would invest 248.00 in Hua Hong Semiconductor on November 9, 2024 and sell it today you would earn a total of 64.00 from holding Hua Hong Semiconductor or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Hong Semiconductor vs. Gold Road Resources
Performance |
| Timeline |
| Hua Hong Semiconductor |
| Gold Road Resources |
Hua Hong and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Hong and Gold Road
The main advantage of trading using opposite Hua Hong and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Hong position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Hua Hong vs. China Communications Services | Hua Hong vs. ecotel communication ag | Hua Hong vs. Hemisphere Energy Corp | Hua Hong vs. Check Point Software |
| Gold Road vs. CORNISH METALS INC | Gold Road vs. Calibre Mining Corp | Gold Road vs. MCEWEN MINING INC | Gold Road vs. ETFS Coffee ETC |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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