Correlation Between Huafa Industrial and Kweichow Moutai
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By analyzing existing cross correlation between Huafa Industrial Co and Kweichow Moutai Co, you can compare the effects of market volatilities on Huafa Industrial and Kweichow Moutai 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 Kweichow Moutai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huafa Industrial and Kweichow Moutai.
Diversification Opportunities for Huafa Industrial and Kweichow Moutai
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Huafa and Kweichow is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Huafa Industrial Co and Kweichow Moutai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kweichow Moutai 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 Kweichow Moutai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kweichow Moutai has no effect on the direction of Huafa Industrial i.e., Huafa Industrial and Kweichow Moutai go up and down completely randomly.
Pair Corralation between Huafa Industrial and Kweichow Moutai
Assuming the 90 days trading horizon Huafa Industrial Co is expected to under-perform the Kweichow Moutai. In addition to that, Huafa Industrial is 1.35 times more volatile than Kweichow Moutai Co. It trades about -0.25 of its total potential returns per unit of risk. Kweichow Moutai Co is currently generating about -0.18 per unit of volatility. If you would invest 148,800 in Kweichow Moutai Co on November 2, 2024 and sell it today you would lose (5,301) from holding Kweichow Moutai Co or give up 3.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huafa Industrial Co vs. Kweichow Moutai Co
Performance |
| Timeline |
| Huafa Industrial |
| Kweichow Moutai |
Huafa Industrial and Kweichow Moutai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huafa Industrial and Kweichow Moutai
The main advantage of trading using opposite Huafa Industrial and Kweichow Moutai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huafa Industrial position performs unexpectedly, Kweichow Moutai 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 Kweichow Moutai will offset losses from the drop in Kweichow Moutai's long position.| Huafa Industrial vs. Spring Airlines Co | Huafa Industrial vs. Chengtun Mining Group | Huafa Industrial vs. Xinjiang Baodi Mining | Huafa Industrial vs. North Copper Shanxi |
| Kweichow Moutai vs. Xiwang Foodstuffs Co | Kweichow Moutai vs. Anji Foodstuff Co | Kweichow Moutai vs. Kidswant Children Products | Kweichow Moutai vs. Beingmate Baby Child |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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