Correlation Between Sichuan Newsnet and Huafa Industrial
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By analyzing existing cross correlation between Sichuan Newsnet Media and Huafa Industrial Co, you can compare the effects of market volatilities on Sichuan Newsnet and Huafa Industrial 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 Sichuan Newsnet with a short position of Huafa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Newsnet and Huafa Industrial.
Diversification Opportunities for Sichuan Newsnet and Huafa Industrial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sichuan and Huafa is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Newsnet Media and Huafa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huafa Industrial and Sichuan Newsnet 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 Sichuan Newsnet Media are associated (or correlated) with Huafa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huafa Industrial has no effect on the direction of Sichuan Newsnet i.e., Sichuan Newsnet and Huafa Industrial go up and down completely randomly.
Pair Corralation between Sichuan Newsnet and Huafa Industrial
Assuming the 90 days trading horizon Sichuan Newsnet Media is expected to generate 1.47 times more return on investment than Huafa Industrial. However, Sichuan Newsnet is 1.47 times more volatile than Huafa Industrial Co. It trades about 0.01 of its potential returns per unit of risk. Huafa Industrial Co is currently generating about -0.04 per unit of risk. If you would invest 1,740 in Sichuan Newsnet Media on November 7, 2024 and sell it today you would lose (216.00) from holding Sichuan Newsnet Media or give up 12.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sichuan Newsnet Media vs. Huafa Industrial Co
Performance |
| Timeline |
| Sichuan Newsnet Media |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Huafa Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sichuan Newsnet and Huafa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Newsnet and Huafa Industrial
The main advantage of trading using opposite Sichuan Newsnet and Huafa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Newsnet position performs unexpectedly, Huafa Industrial 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 Huafa Industrial will offset losses from the drop in Huafa Industrial's long position.The idea behind Sichuan Newsnet Media and Huafa Industrial 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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