Correlation Between Huafa Industrial and Chahua Modern
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By analyzing existing cross correlation between Huafa Industrial Co and Chahua Modern Housewares, you can compare the effects of market volatilities on Huafa Industrial and Chahua Modern 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 Chahua Modern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huafa Industrial and Chahua Modern.
Diversification Opportunities for Huafa Industrial and Chahua Modern
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huafa and Chahua is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Huafa Industrial Co and Chahua Modern Housewares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chahua Modern Housewares 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 Chahua Modern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chahua Modern Housewares has no effect on the direction of Huafa Industrial i.e., Huafa Industrial and Chahua Modern go up and down completely randomly.
Pair Corralation between Huafa Industrial and Chahua Modern
Assuming the 90 days trading horizon Huafa Industrial is expected to generate 2.46 times less return on investment than Chahua Modern. But when comparing it to its historical volatility, Huafa Industrial Co is 1.48 times less risky than Chahua Modern. It trades about 0.12 of its potential returns per unit of risk. Chahua Modern Housewares is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,345 in Chahua Modern Housewares on September 2, 2024 and sell it today you would earn a total of 842.00 from holding Chahua Modern Housewares or generate 62.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huafa Industrial Co vs. Chahua Modern Housewares
Performance |
| Timeline |
| Huafa Industrial |
| Chahua Modern Housewares |
Huafa Industrial and Chahua Modern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huafa Industrial and Chahua Modern
The main advantage of trading using opposite Huafa Industrial and Chahua Modern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huafa Industrial position performs unexpectedly, Chahua Modern 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 Chahua Modern will offset losses from the drop in Chahua Modern'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 |
| Chahua Modern vs. Guangzhou Ruoyuchen Information | Chahua Modern vs. Guangzhou Jointas Chemical | Chahua Modern vs. Lianhe Chemical Technology | Chahua Modern vs. Dawning Information Industry |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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