Correlation Between Harbin Air and Heilongjiang Publishing

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Can any of the company-specific risk be diversified away by investing in both Harbin Air and Heilongjiang Publishing 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 Harbin Air and Heilongjiang Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harbin Air Conditioning and Heilongjiang Publishing Media, you can compare the effects of market volatilities on Harbin Air and Heilongjiang Publishing 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 Harbin Air with a short position of Heilongjiang Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbin Air and Heilongjiang Publishing.

Diversification Opportunities for Harbin Air and Heilongjiang Publishing

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Harbin and Heilongjiang is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Harbin Air Conditioning and Heilongjiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heilongjiang Publishing and Harbin Air 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 Harbin Air Conditioning are associated (or correlated) with Heilongjiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heilongjiang Publishing has no effect on the direction of Harbin Air i.e., Harbin Air and Heilongjiang Publishing go up and down completely randomly.

Pair Corralation between Harbin Air and Heilongjiang Publishing

Assuming the 90 days trading horizon Harbin Air Conditioning is expected to generate 2.65 times more return on investment than Heilongjiang Publishing. However, Harbin Air is 2.65 times more volatile than Heilongjiang Publishing Media. It trades about 0.08 of its potential returns per unit of risk. Heilongjiang Publishing Media is currently generating about 0.12 per unit of risk. If you would invest  423.00  in Harbin Air Conditioning on November 7, 2024 and sell it today you would earn a total of  23.00  from holding Harbin Air Conditioning or generate 5.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Harbin Air Conditioning  vs.  Heilongjiang Publishing Media

 Performance 
       Timeline  
Harbin Air Conditioning 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Harbin Air Conditioning has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Heilongjiang Publishing 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Heilongjiang Publishing Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Heilongjiang Publishing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harbin Air and Heilongjiang Publishing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Harbin Air and Heilongjiang Publishing

The main advantage of trading using opposite Harbin Air and Heilongjiang Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbin Air position performs unexpectedly, Heilongjiang Publishing 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 Heilongjiang Publishing will offset losses from the drop in Heilongjiang Publishing's long position.
The idea behind Harbin Air Conditioning and Heilongjiang Publishing Media 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.
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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