Correlation Between Hua Hong and Kellogg
Can any of the company-specific risk be diversified away by investing in both Hua Hong and Kellogg 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 Kellogg 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 Kellogg Company, you can compare the effects of market volatilities on Hua Hong and Kellogg 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 Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and Kellogg.
Diversification Opportunities for Hua Hong and Kellogg
Modest diversification
The 3 months correlation between Hua and Kellogg is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and Kellogg Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellogg Company 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 Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellogg Company has no effect on the direction of Hua Hong i.e., Hua Hong and Kellogg go up and down completely randomly.
Pair Corralation between Hua Hong and Kellogg
Assuming the 90 days horizon Hua Hong Semiconductor is expected to generate 4.91 times more return on investment than Kellogg. However, Hua Hong is 4.91 times more volatile than Kellogg Company. It trades about 0.18 of its potential returns per unit of risk. Kellogg Company is currently generating about 0.06 per unit of risk. If you would invest 252.00 in Hua Hong Semiconductor on November 3, 2024 and sell it today you would earn a total of 28.00 from holding Hua Hong Semiconductor or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Hong Semiconductor vs. Kellogg Company
Performance |
| Timeline |
| Hua Hong Semiconductor |
| Kellogg Company |
Hua Hong and Kellogg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Hong and Kellogg
The main advantage of trading using opposite Hua Hong and Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Hong position performs unexpectedly, Kellogg 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 Kellogg will offset losses from the drop in Kellogg's long position.| Hua Hong vs. PLAYMATES TOYS | Hua Hong vs. QINGCI GAMES INC | Hua Hong vs. Tower Semiconductor | Hua Hong vs. ON SEMICONDUCTOR |
| Kellogg vs. Spirent Communications plc | Kellogg vs. Iridium Communications | Kellogg vs. INTERNET INJPADR 1 | Kellogg vs. COMPUTERSHARE |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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