Correlation Between Huafa Industrial and Iat Automobile
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By analyzing existing cross correlation between Huafa Industrial Co and Iat Automobile Technology, you can compare the effects of market volatilities on Huafa Industrial and Iat Automobile 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 Iat Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huafa Industrial and Iat Automobile.
Diversification Opportunities for Huafa Industrial and Iat Automobile
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huafa and Iat is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Huafa Industrial Co and Iat Automobile Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iat Automobile Technology 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 Iat Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iat Automobile Technology has no effect on the direction of Huafa Industrial i.e., Huafa Industrial and Iat Automobile go up and down completely randomly.
Pair Corralation between Huafa Industrial and Iat Automobile
Assuming the 90 days trading horizon Huafa Industrial Co is expected to under-perform the Iat Automobile. But the stock apears to be less risky and, when comparing its historical volatility, Huafa Industrial Co is 2.1 times less risky than Iat Automobile. The stock trades about -0.1 of its potential returns per unit of risk. The Iat Automobile Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,205 in Iat Automobile Technology on August 31, 2024 and sell it today you would lose (37.00) from holding Iat Automobile Technology or give up 3.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huafa Industrial Co vs. Iat Automobile Technology
Performance |
| Timeline |
| Huafa Industrial |
| Iat Automobile Technology |
Huafa Industrial and Iat Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huafa Industrial and Iat Automobile
The main advantage of trading using opposite Huafa Industrial and Iat Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huafa Industrial position performs unexpectedly, Iat Automobile 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 Iat Automobile will offset losses from the drop in Iat Automobile's long position.| Huafa Industrial vs. Kweichow Moutai Co | Huafa Industrial vs. Contemporary Amperex Technology | Huafa Industrial vs. G bits Network Technology | Huafa Industrial vs. BYD Co Ltd |
| Iat Automobile vs. China State Construction | Iat Automobile vs. China Merchants Shekou | Iat Automobile vs. Huafa Industrial Co | Iat Automobile vs. China International Capital |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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