Correlation Between Highwealth Construction and China Mobile
Can any of the company-specific risk be diversified away by investing in both Highwealth Construction and China Mobile 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 Highwealth Construction and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highwealth Construction Corp and China Mobile, you can compare the effects of market volatilities on Highwealth Construction and China Mobile 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 Highwealth Construction with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highwealth Construction and China Mobile.
Diversification Opportunities for Highwealth Construction and China Mobile
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Highwealth and China is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Highwealth Construction Corp and China Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile and Highwealth Construction 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 Highwealth Construction Corp are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mobile has no effect on the direction of Highwealth Construction i.e., Highwealth Construction and China Mobile go up and down completely randomly.
Pair Corralation between Highwealth Construction and China Mobile
Assuming the 90 days trading horizon Highwealth Construction Corp is expected to under-perform the China Mobile. In addition to that, Highwealth Construction is 1.48 times more volatile than China Mobile. It trades about -0.19 of its total potential returns per unit of risk. China Mobile is currently generating about 0.15 per unit of volatility. If you would invest 1,360 in China Mobile on October 30, 2024 and sell it today you would earn a total of 80.00 from holding China Mobile or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highwealth Construction Corp vs. China Mobile
Performance |
| Timeline |
| Highwealth Construction |
| China Mobile |
Highwealth Construction and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highwealth Construction and China Mobile
The main advantage of trading using opposite Highwealth Construction and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highwealth Construction position performs unexpectedly, China Mobile 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 Mobile will offset losses from the drop in China Mobile's long position.| Highwealth Construction vs. Huaku Development Co | Highwealth Construction vs. Farglory Land Development | Highwealth Construction vs. Ruentex Development Co | Highwealth Construction vs. Ruentex Industries |
| China Mobile vs. U Media Communications | China Mobile vs. X Legend Entertainment Co | China Mobile vs. De Licacy Industrial | China Mobile vs. Unique Optical Industrial |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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