Correlation Between St James’s and Hua Hong
Can any of the company-specific risk be diversified away by investing in both St James’s and Hua Hong 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 St James’s and Hua Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between St Jamess Place and Hua Hong Semiconductor, you can compare the effects of market volatilities on St James’s and Hua Hong 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 St James’s with a short position of Hua Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of St James’s and Hua Hong.
Diversification Opportunities for St James’s and Hua Hong
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 1IV and Hua is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding St Jamess Place and Hua Hong Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Hong Semiconductor and St James’s 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 St Jamess Place are associated (or correlated) with Hua Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Hong Semiconductor has no effect on the direction of St James’s i.e., St James’s and Hua Hong go up and down completely randomly.
Pair Corralation between St James’s and Hua Hong
Assuming the 90 days horizon St Jamess Place is expected to under-perform the Hua Hong. But the stock apears to be less risky and, when comparing its historical volatility, St Jamess Place is 1.42 times less risky than Hua Hong. The stock trades about 0.0 of its potential returns per unit of risk. The Hua Hong Semiconductor is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 335.00 in Hua Hong Semiconductor on October 9, 2024 and sell it today you would lose (87.00) from holding Hua Hong Semiconductor or give up 25.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
St Jamess Place vs. Hua Hong Semiconductor
Performance |
| Timeline |
| St Jamess Place |
| Hua Hong Semiconductor |
St James’s and Hua Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with St James’s and Hua Hong
The main advantage of trading using opposite St James’s and Hua Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if St James’s position performs unexpectedly, Hua Hong 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 Hua Hong will offset losses from the drop in Hua Hong's long position.| St James’s vs. PDS Biotechnology Corp | St James’s vs. Astral Foods Limited | St James’s vs. SENECA FOODS A | St James’s vs. TYSON FOODS A |
| Hua Hong vs. Coor Service Management | Hua Hong vs. VULCAN MATERIALS | Hua Hong vs. Sims Metal Management | Hua Hong vs. SANOK RUBBER ZY |
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 Correlations module to find global opportunities by holding instruments from different markets.
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