Correlation Between Auto Trader and Hua Hong
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Hua Hong 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 Auto Trader and Hua Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Hua Hong Semiconductor, you can compare the effects of market volatilities on Auto Trader and Hua Hong 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 Auto Trader with a short position of Hua Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Hua Hong.
Diversification Opportunities for Auto Trader and Hua Hong
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Auto and Hua is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Hua Hong Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Hong Semiconductor and Auto Trader 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 Auto Trader Group are associated (or correlated) with Hua Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Hong Semiconductor has no effect on the direction of Auto Trader i.e., Auto Trader and Hua Hong go up and down completely randomly.
Pair Corralation between Auto Trader and Hua Hong
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the Hua Hong. But the stock apears to be less risky and, when comparing its historical volatility, Auto Trader Group is 3.18 times less risky than Hua Hong. The stock trades about -0.31 of its potential returns per unit of risk. The Hua Hong Semiconductor is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 254.00 in Hua Hong Semiconductor on October 12, 2024 and sell it today you would earn a total of 4.00 from holding Hua Hong Semiconductor or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. Hua Hong Semiconductor
Performance |
| Timeline |
| Auto Trader Group |
| Hua Hong Semiconductor |
Auto Trader and Hua Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Hua Hong
The main advantage of trading using opposite Auto Trader and Hua Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Hua Hong 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 Hua Hong will offset losses from the drop in Hua Hong's long position.| Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc |
| Hua Hong vs. Guangdong Investment Limited | Hua Hong vs. Auto Trader Group | Hua Hong vs. MARKET VECTR RETAIL | Hua Hong vs. PennantPark Investment |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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