Correlation Between Huaku Development and Shining Building
Can any of the company-specific risk be diversified away by investing in both Huaku Development and Shining Building 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 Shining Building 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 Shining Building Business, you can compare the effects of market volatilities on Huaku Development and Shining Building 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 Shining Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaku Development and Shining Building.
Diversification Opportunities for Huaku Development and Shining Building
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Huaku and Shining is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Huaku Development Co and Shining Building Business in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shining Building Business 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 Shining Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shining Building Business has no effect on the direction of Huaku Development i.e., Huaku Development and Shining Building go up and down completely randomly.
Pair Corralation between Huaku Development and Shining Building
Assuming the 90 days trading horizon Huaku Development is expected to generate 2.43 times less return on investment than Shining Building. But when comparing it to its historical volatility, Huaku Development Co is 1.16 times less risky than Shining Building. It trades about 0.05 of its potential returns per unit of risk. Shining Building Business is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,050 in Shining Building Business on August 31, 2024 and sell it today you would earn a total of 65.00 from holding Shining Building Business or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Huaku Development Co vs. Shining Building Business
Performance |
| Timeline |
| Huaku Development |
| Shining Building Business |
Huaku Development and Shining Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaku Development and Shining Building
The main advantage of trading using opposite Huaku Development and Shining Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaku Development position performs unexpectedly, Shining Building 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 Shining Building will offset losses from the drop in Shining Building'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 |
| Shining Building vs. Farglory Land Development | Shining Building vs. Radium Life Tech | Shining Building vs. Huaku Development Co | Shining Building vs. Chong Hong Construction |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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