Correlation Between Hua Xia and ZTE Corp
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By analyzing existing cross correlation between Hua Xia Bank and ZTE Corp, you can compare the effects of market volatilities on Hua Xia and ZTE Corp 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 Hua Xia with a short position of ZTE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Xia and ZTE Corp.
Diversification Opportunities for Hua Xia and ZTE Corp
Very weak diversification
The 3 months correlation between Hua and ZTE is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hua Xia Bank and ZTE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTE Corp and Hua Xia 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 Hua Xia Bank are associated (or correlated) with ZTE Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTE Corp has no effect on the direction of Hua Xia i.e., Hua Xia and ZTE Corp go up and down completely randomly.
Pair Corralation between Hua Xia and ZTE Corp
Assuming the 90 days trading horizon Hua Xia Bank is expected to under-perform the ZTE Corp. But the stock apears to be less risky and, when comparing its historical volatility, Hua Xia Bank is 3.33 times less risky than ZTE Corp. The stock trades about -0.06 of its potential returns per unit of risk. The ZTE Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,130 in ZTE Corp on October 7, 2024 and sell it today you would earn a total of 435.00 from holding ZTE Corp or generate 13.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Xia Bank vs. ZTE Corp
Performance |
| Timeline |
| Hua Xia Bank |
| ZTE Corp |
Hua Xia and ZTE Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Xia and ZTE Corp
The main advantage of trading using opposite Hua Xia and ZTE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Xia position performs unexpectedly, ZTE Corp 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 ZTE Corp will offset losses from the drop in ZTE Corp's long position.| Hua Xia vs. Qijing Machinery | Hua Xia vs. Xinjiang Communications Construction | Hua Xia vs. Dr Peng Telecom | Hua Xia vs. Guangxi Wuzhou Communications |
| ZTE Corp vs. Elite Color Environmental | ZTE Corp vs. Bangyan Technology Co | ZTE Corp vs. Tianjin Ruixin Technology | ZTE Corp vs. National Silicon Industry |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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