Correlation Between Huafa Industrial and Caihong Display
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By analyzing existing cross correlation between Huafa Industrial Co and Caihong Display Devices, you can compare the effects of market volatilities on Huafa Industrial and Caihong Display 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 Caihong Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huafa Industrial and Caihong Display.
Diversification Opportunities for Huafa Industrial and Caihong Display
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Huafa and Caihong is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Huafa Industrial Co and Caihong Display Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caihong Display Devices 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 Caihong Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caihong Display Devices has no effect on the direction of Huafa Industrial i.e., Huafa Industrial and Caihong Display go up and down completely randomly.
Pair Corralation between Huafa Industrial and Caihong Display
Assuming the 90 days trading horizon Huafa Industrial Co is expected to under-perform the Caihong Display. But the stock apears to be less risky and, when comparing its historical volatility, Huafa Industrial Co is 1.04 times less risky than Caihong Display. The stock trades about -0.02 of its potential returns per unit of risk. The Caihong Display Devices is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 624.00 in Caihong Display Devices on September 1, 2024 and sell it today you would earn a total of 73.00 from holding Caihong Display Devices or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huafa Industrial Co vs. Caihong Display Devices
Performance |
| Timeline |
| Huafa Industrial |
| Caihong Display Devices |
Huafa Industrial and Caihong Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huafa Industrial and Caihong Display
The main advantage of trading using opposite Huafa Industrial and Caihong Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huafa Industrial position performs unexpectedly, Caihong Display 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 Caihong Display will offset losses from the drop in Caihong Display'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 |
| Caihong Display vs. Eastroc Beverage Group | Caihong Display vs. Fujian Anjoy Foods | Caihong Display vs. Huatian Hotel Group | Caihong Display vs. Beijing Sanyuan Foods |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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