Correlation Between Huafa Industrial and China National
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By analyzing existing cross correlation between Huafa Industrial Co and China National Software, you can compare the effects of market volatilities on Huafa Industrial and China National 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 China National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huafa Industrial and China National.
Diversification Opportunities for Huafa Industrial and China National
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huafa and China is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Huafa Industrial Co and China National Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China National Software 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 China National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China National Software has no effect on the direction of Huafa Industrial i.e., Huafa Industrial and China National go up and down completely randomly.
Pair Corralation between Huafa Industrial and China National
Assuming the 90 days trading horizon Huafa Industrial Co is expected to under-perform the China National. But the stock apears to be less risky and, when comparing its historical volatility, Huafa Industrial Co is 1.23 times less risky than China National. The stock trades about -0.02 of its potential returns per unit of risk. The China National Software is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,034 in China National Software on September 1, 2024 and sell it today you would lose (488.00) from holding China National Software or give up 8.09% 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. China National Software
Performance |
| Timeline |
| Huafa Industrial |
| China National Software |
Huafa Industrial and China National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huafa Industrial and China National
The main advantage of trading using opposite Huafa Industrial and China National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huafa Industrial position performs unexpectedly, China National 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 China National will offset losses from the drop in China National's long position.| Huafa Industrial vs. BeiGene | Huafa Industrial vs. Kweichow Moutai Co | Huafa Industrial vs. Beijing Roborock Technology | Huafa Industrial vs. G bits Network Technology |
| China National vs. Ming Yang Smart | China National vs. 159681 | China National vs. 159005 | China National vs. Loctek Ergonomic Technology |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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