Correlation Between Wuhan Hvsen and Hunan TV

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Can any of the company-specific risk be diversified away by investing in both Wuhan Hvsen and Hunan TV 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 Wuhan Hvsen and Hunan TV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wuhan Hvsen Biotechnology and Hunan TV Broadcast, you can compare the effects of market volatilities on Wuhan Hvsen and Hunan TV 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 Wuhan Hvsen with a short position of Hunan TV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Hvsen and Hunan TV.

Diversification Opportunities for Wuhan Hvsen and Hunan TV

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Wuhan and Hunan is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Hvsen Biotechnology and Hunan TV Broadcast in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan TV Broadcast and Wuhan Hvsen 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 Wuhan Hvsen Biotechnology are associated (or correlated) with Hunan TV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan TV Broadcast has no effect on the direction of Wuhan Hvsen i.e., Wuhan Hvsen and Hunan TV go up and down completely randomly.

Pair Corralation between Wuhan Hvsen and Hunan TV

Assuming the 90 days trading horizon Wuhan Hvsen is expected to generate 2.38 times less return on investment than Hunan TV. But when comparing it to its historical volatility, Wuhan Hvsen Biotechnology is 1.2 times less risky than Hunan TV. It trades about 0.05 of its potential returns per unit of risk. Hunan TV Broadcast is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  496.00  in Hunan TV Broadcast on November 3, 2024 and sell it today you would earn a total of  223.00  from holding Hunan TV Broadcast or generate 44.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Wuhan Hvsen Biotechnology  vs.  Hunan TV Broadcast

 Performance 
       Timeline  
Wuhan Hvsen Biotechnology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wuhan Hvsen Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Wuhan Hvsen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Hunan TV Broadcast 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hunan TV Broadcast has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Wuhan Hvsen and Hunan TV Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wuhan Hvsen and Hunan TV

The main advantage of trading using opposite Wuhan Hvsen and Hunan TV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuhan Hvsen position performs unexpectedly, Hunan TV 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 Hunan TV will offset losses from the drop in Hunan TV's long position.
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The idea behind Wuhan Hvsen Biotechnology and Hunan TV Broadcast 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.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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