Correlation Between Hua Xia and Long Yuan
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By analyzing existing cross correlation between Hua Xia Bank and Long Yuan Construction, you can compare the effects of market volatilities on Hua Xia and Long Yuan 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 Long Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Xia and Long Yuan.
Diversification Opportunities for Hua Xia and Long Yuan
Poor diversification
The 3 months correlation between Hua and Long is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hua Xia Bank and Long Yuan Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Yuan Construction 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 Long Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Yuan Construction has no effect on the direction of Hua Xia i.e., Hua Xia and Long Yuan go up and down completely randomly.
Pair Corralation between Hua Xia and Long Yuan
Assuming the 90 days trading horizon Hua Xia Bank is expected to generate 0.52 times more return on investment than Long Yuan. However, Hua Xia Bank is 1.91 times less risky than Long Yuan. It trades about 0.08 of its potential returns per unit of risk. Long Yuan Construction is currently generating about -0.02 per unit of risk. If you would invest 483.00 in Hua Xia Bank on September 3, 2024 and sell it today you would earn a total of 274.00 from holding Hua Xia Bank or generate 56.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Xia Bank vs. Long Yuan Construction
Performance |
| Timeline |
| Hua Xia Bank |
| Long Yuan Construction |
Hua Xia and Long Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Xia and Long Yuan
The main advantage of trading using opposite Hua Xia and Long Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Xia position performs unexpectedly, Long Yuan 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 Long Yuan will offset losses from the drop in Long Yuan's long position.| Hua Xia vs. Western Metal Materials | Hua Xia vs. Bomesc Offshore Engineering | Hua Xia vs. Ningxia Building Materials | Hua Xia vs. Dymatic Chemicals |
| Long Yuan vs. Cultural Investment Holdings | Long Yuan vs. Gome Telecom Equipment | Long Yuan vs. Bus Online Co | Long Yuan vs. Holitech Technology Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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