Correlation Between Huaku Development and EnTie Commercial
Can any of the company-specific risk be diversified away by investing in both Huaku Development and EnTie Commercial 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 Huaku Development and EnTie Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huaku Development Co and EnTie Commercial Bank, you can compare the effects of market volatilities on Huaku Development and EnTie Commercial 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 Huaku Development with a short position of EnTie Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaku Development and EnTie Commercial.
Diversification Opportunities for Huaku Development and EnTie Commercial
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Huaku and EnTie is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Huaku Development Co and EnTie Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnTie Commercial Bank and Huaku Development 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 Huaku Development Co are associated (or correlated) with EnTie Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnTie Commercial Bank has no effect on the direction of Huaku Development i.e., Huaku Development and EnTie Commercial go up and down completely randomly.
Pair Corralation between Huaku Development and EnTie Commercial
Assuming the 90 days trading horizon Huaku Development Co is expected to generate 2.04 times more return on investment than EnTie Commercial. However, Huaku Development is 2.04 times more volatile than EnTie Commercial Bank. It trades about 0.05 of its potential returns per unit of risk. EnTie Commercial Bank is currently generating about 0.02 per unit of risk. If you would invest 8,990 in Huaku Development Co on September 4, 2024 and sell it today you would earn a total of 2,910 from holding Huaku Development Co or generate 32.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaku Development Co vs. EnTie Commercial Bank
Performance |
| Timeline |
| Huaku Development |
| EnTie Commercial Bank |
Huaku Development and EnTie Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaku Development and EnTie Commercial
The main advantage of trading using opposite Huaku Development and EnTie Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaku Development position performs unexpectedly, EnTie Commercial 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 EnTie Commercial will offset losses from the drop in EnTie Commercial's long position.| Huaku Development vs. Chong Hong Construction | Huaku Development vs. Highwealth Construction Corp | Huaku Development vs. Fubon Financial Holding | Huaku Development vs. CTBC Financial Holding |
| EnTie Commercial vs. Central Reinsurance Corp | EnTie Commercial vs. Huaku Development Co | EnTie Commercial vs. Chailease Holding Co | EnTie Commercial vs. CTBC Financial Holding |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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