Correlation Between Huaku Development and ESUN Financial
Can any of the company-specific risk be diversified away by investing in both Huaku Development and ESUN Financial 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 ESUN Financial 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 ESUN Financial Holding, you can compare the effects of market volatilities on Huaku Development and ESUN Financial 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 ESUN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaku Development and ESUN Financial.
Diversification Opportunities for Huaku Development and ESUN Financial
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Huaku and ESUN is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Huaku Development Co and ESUN Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESUN Financial Holding 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 ESUN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESUN Financial Holding has no effect on the direction of Huaku Development i.e., Huaku Development and ESUN Financial go up and down completely randomly.
Pair Corralation between Huaku Development and ESUN Financial
Assuming the 90 days trading horizon Huaku Development Co is expected to generate 2.58 times more return on investment than ESUN Financial. However, Huaku Development is 2.58 times more volatile than ESUN Financial Holding. It trades about 0.03 of its potential returns per unit of risk. ESUN Financial Holding is currently generating about 0.03 per unit of risk. If you would invest 12,100 in Huaku Development Co on September 2, 2024 and sell it today you would earn a total of 100.00 from holding Huaku Development Co or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaku Development Co vs. ESUN Financial Holding
Performance |
| Timeline |
| Huaku Development |
| ESUN Financial Holding |
Huaku Development and ESUN Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaku Development and ESUN Financial
The main advantage of trading using opposite Huaku Development and ESUN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaku Development position performs unexpectedly, ESUN Financial 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 ESUN Financial will offset losses from the drop in ESUN Financial's long position.| Huaku Development vs. Ruentex Development Co | Huaku Development vs. CTCI Corp | Huaku Development vs. Information Technology Total | Huaku Development vs. Ennoconn Corp |
| ESUN Financial vs. Mega Financial Holding | ESUN Financial vs. CTBC Financial Holding | ESUN Financial vs. First Financial Holding | ESUN Financial vs. Fubon 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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