Correlation Between Huaku Development and CHC Resources
Can any of the company-specific risk be diversified away by investing in both Huaku Development and CHC Resources 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 CHC Resources 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 CHC Resources Corp, you can compare the effects of market volatilities on Huaku Development and CHC Resources 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 CHC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaku Development and CHC Resources.
Diversification Opportunities for Huaku Development and CHC Resources
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Huaku and CHC is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Huaku Development Co and CHC Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHC Resources Corp 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 CHC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHC Resources Corp has no effect on the direction of Huaku Development i.e., Huaku Development and CHC Resources go up and down completely randomly.
Pair Corralation between Huaku Development and CHC Resources
Assuming the 90 days trading horizon Huaku Development Co is expected to generate 1.64 times more return on investment than CHC Resources. However, Huaku Development is 1.64 times more volatile than CHC Resources Corp. It trades about 0.05 of its potential returns per unit of risk. CHC Resources Corp is currently generating about 0.08 per unit of risk. If you would invest 8,790 in Huaku Development Co on August 29, 2024 and sell it today you would earn a total of 3,510 from holding Huaku Development Co or generate 39.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaku Development Co vs. CHC Resources Corp
Performance |
| Timeline |
| Huaku Development |
| CHC Resources Corp |
Huaku Development and CHC Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaku Development and CHC Resources
The main advantage of trading using opposite Huaku Development and CHC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaku Development position performs unexpectedly, CHC Resources 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 CHC Resources will offset losses from the drop in CHC Resources' 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 |
| CHC Resources vs. China Man Made Fiber | CHC Resources vs. USI Corp | CHC Resources vs. China Petrochemical Development | CHC Resources vs. Yulon Motor Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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