Correlation Between HYDROFARM HLD and China Resources
Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD and China Resources 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 HYDROFARM HLD and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HYDROFARM HLD GRP and China Resources Beer, you can compare the effects of market volatilities on HYDROFARM HLD and China Resources 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 HYDROFARM HLD with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and China Resources.
Diversification Opportunities for HYDROFARM HLD and China Resources
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HYDROFARM and China is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer and HYDROFARM HLD 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 HYDROFARM HLD GRP are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and China Resources go up and down completely randomly.
Pair Corralation between HYDROFARM HLD and China Resources
Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to generate 1.79 times more return on investment than China Resources. However, HYDROFARM HLD is 1.79 times more volatile than China Resources Beer. It trades about 0.02 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.17 per unit of risk. If you would invest 61.00 in HYDROFARM HLD GRP on August 29, 2024 and sell it today you would lose (1.00) from holding HYDROFARM HLD GRP or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HYDROFARM HLD GRP vs. China Resources Beer
Performance |
| Timeline |
| HYDROFARM HLD GRP |
| China Resources Beer |
HYDROFARM HLD and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYDROFARM HLD and China Resources
The main advantage of trading using opposite HYDROFARM HLD and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYDROFARM HLD position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| HYDROFARM HLD vs. Superior Plus Corp | HYDROFARM HLD vs. NMI Holdings | HYDROFARM HLD vs. Origin Agritech | HYDROFARM HLD vs. SIVERS SEMICONDUCTORS AB |
| China Resources vs. Diamyd Medical AB | China Resources vs. Monster Beverage Corp | China Resources vs. Dairy Farm International | China Resources vs. INDOFOOD AGRI RES |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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