Correlation Between Huafa Industrial and Guangzhou Dongfang
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By analyzing existing cross correlation between Huafa Industrial Co and Guangzhou Dongfang Hotel, you can compare the effects of market volatilities on Huafa Industrial and Guangzhou Dongfang 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 Huafa Industrial with a short position of Guangzhou Dongfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huafa Industrial and Guangzhou Dongfang.
Diversification Opportunities for Huafa Industrial and Guangzhou Dongfang
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Huafa and Guangzhou is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Huafa Industrial Co and Guangzhou Dongfang Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Dongfang Hotel and Huafa Industrial 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 Huafa Industrial Co are associated (or correlated) with Guangzhou Dongfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Dongfang Hotel has no effect on the direction of Huafa Industrial i.e., Huafa Industrial and Guangzhou Dongfang go up and down completely randomly.
Pair Corralation between Huafa Industrial and Guangzhou Dongfang
Assuming the 90 days trading horizon Huafa Industrial Co is expected to under-perform the Guangzhou Dongfang. But the stock apears to be less risky and, when comparing its historical volatility, Huafa Industrial Co is 1.22 times less risky than Guangzhou Dongfang. The stock trades about 0.0 of its potential returns per unit of risk. The Guangzhou Dongfang Hotel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 889.00 in Guangzhou Dongfang Hotel on September 2, 2024 and sell it today you would earn a total of 141.00 from holding Guangzhou Dongfang Hotel or generate 15.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huafa Industrial Co vs. Guangzhou Dongfang Hotel
Performance |
| Timeline |
| Huafa Industrial |
| Guangzhou Dongfang Hotel |
Huafa Industrial and Guangzhou Dongfang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huafa Industrial and Guangzhou Dongfang
The main advantage of trading using opposite Huafa Industrial and Guangzhou Dongfang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huafa Industrial position performs unexpectedly, Guangzhou Dongfang 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 Guangzhou Dongfang will offset losses from the drop in Guangzhou Dongfang's long position.| Huafa Industrial vs. Ningbo Fangzheng Automobile | Huafa Industrial vs. Anhui Jianghuai Automobile | Huafa Industrial vs. Jinhe Biotechnology Co | Huafa Industrial vs. Guangzhou KingTeller Technology |
| Guangzhou Dongfang vs. Cultural Investment Holdings | Guangzhou Dongfang vs. Gome Telecom Equipment | Guangzhou Dongfang vs. Bus Online Co | Guangzhou Dongfang 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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