Correlation Between Hubei Forbon and Dongxing Sec
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By analyzing existing cross correlation between Hubei Forbon Technology and Dongxing Sec Co, you can compare the effects of market volatilities on Hubei Forbon and Dongxing Sec 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 Hubei Forbon with a short position of Dongxing Sec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Forbon and Dongxing Sec.
Diversification Opportunities for Hubei Forbon and Dongxing Sec
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hubei and Dongxing is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Forbon Technology and Dongxing Sec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongxing Sec and Hubei Forbon 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 Hubei Forbon Technology are associated (or correlated) with Dongxing Sec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongxing Sec has no effect on the direction of Hubei Forbon i.e., Hubei Forbon and Dongxing Sec go up and down completely randomly.
Pair Corralation between Hubei Forbon and Dongxing Sec
Assuming the 90 days trading horizon Hubei Forbon Technology is expected to generate 0.79 times more return on investment than Dongxing Sec. However, Hubei Forbon Technology is 1.27 times less risky than Dongxing Sec. It trades about 0.31 of its potential returns per unit of risk. Dongxing Sec Co is currently generating about 0.16 per unit of risk. If you would invest 756.00 in Hubei Forbon Technology on November 7, 2024 and sell it today you would earn a total of 74.00 from holding Hubei Forbon Technology or generate 9.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubei Forbon Technology vs. Dongxing Sec Co
Performance |
| Timeline |
| Hubei Forbon Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Dongxing Sec |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hubei Forbon and Dongxing Sec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubei Forbon and Dongxing Sec
The main advantage of trading using opposite Hubei Forbon and Dongxing Sec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubei Forbon position performs unexpectedly, Dongxing Sec 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 Dongxing Sec will offset losses from the drop in Dongxing Sec's long position.The idea behind Hubei Forbon Technology and Dongxing Sec Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Stocks Directory module to find actively traded stocks across global markets.
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