Correlation Between Hengyuan Refining and Rubberex M
Can any of the company-specific risk be diversified away by investing in both Hengyuan Refining and Rubberex M 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 Hengyuan Refining and Rubberex M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hengyuan Refining and Rubberex M, you can compare the effects of market volatilities on Hengyuan Refining and Rubberex M 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 Hengyuan Refining with a short position of Rubberex M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengyuan Refining and Rubberex M.
Diversification Opportunities for Hengyuan Refining and Rubberex M
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hengyuan and Rubberex is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hengyuan Refining and Rubberex M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubberex M and Hengyuan Refining 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 Hengyuan Refining are associated (or correlated) with Rubberex M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubberex M has no effect on the direction of Hengyuan Refining i.e., Hengyuan Refining and Rubberex M go up and down completely randomly.
Pair Corralation between Hengyuan Refining and Rubberex M
Assuming the 90 days trading horizon Hengyuan Refining is expected to under-perform the Rubberex M. But the stock apears to be less risky and, when comparing its historical volatility, Hengyuan Refining is 1.46 times less risky than Rubberex M. The stock trades about -0.54 of its potential returns per unit of risk. The Rubberex M is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Rubberex M on September 3, 2024 and sell it today you would lose (1.00) from holding Rubberex M or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hengyuan Refining vs. Rubberex M
Performance |
| Timeline |
| Hengyuan Refining |
| Rubberex M |
Hengyuan Refining and Rubberex M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hengyuan Refining and Rubberex M
The main advantage of trading using opposite Hengyuan Refining and Rubberex M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengyuan Refining position performs unexpectedly, Rubberex M 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 Rubberex M will offset losses from the drop in Rubberex M's long position.| Hengyuan Refining vs. Eonmetall Group Bhd | Hengyuan Refining vs. Sungei Bagan Rubber | Hengyuan Refining vs. Press Metal Bhd | Hengyuan Refining vs. Central Industrial Corp |
| Rubberex M vs. Kossan Rubber Industries | Rubberex M vs. Minetech Resources Bhd | Rubberex M vs. Swift Haulage Bhd | Rubberex M vs. Insas Bhd |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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