Correlation Between Dalian Thermal and Huagong Tech
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By analyzing existing cross correlation between Dalian Thermal Power and Huagong Tech Co, you can compare the effects of market volatilities on Dalian Thermal and Huagong Tech 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 Dalian Thermal with a short position of Huagong Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dalian Thermal and Huagong Tech.
Diversification Opportunities for Dalian Thermal and Huagong Tech
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dalian and Huagong is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dalian Thermal Power and Huagong Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huagong Tech and Dalian Thermal 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 Dalian Thermal Power are associated (or correlated) with Huagong Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huagong Tech has no effect on the direction of Dalian Thermal i.e., Dalian Thermal and Huagong Tech go up and down completely randomly.
Pair Corralation between Dalian Thermal and Huagong Tech
Assuming the 90 days trading horizon Dalian Thermal Power is expected to under-perform the Huagong Tech. In addition to that, Dalian Thermal is 1.67 times more volatile than Huagong Tech Co. It trades about -0.12 of its total potential returns per unit of risk. Huagong Tech Co is currently generating about 0.28 per unit of volatility. If you would invest 3,510 in Huagong Tech Co on September 27, 2024 and sell it today you would earn a total of 493.00 from holding Huagong Tech Co or generate 14.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dalian Thermal Power vs. Huagong Tech Co
Performance |
| Timeline |
| Dalian Thermal Power |
| Huagong Tech |
Dalian Thermal and Huagong Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dalian Thermal and Huagong Tech
The main advantage of trading using opposite Dalian Thermal and Huagong Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalian Thermal position performs unexpectedly, Huagong Tech 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 Huagong Tech will offset losses from the drop in Huagong Tech's long position.| Dalian Thermal vs. Industrial and Commercial | Dalian Thermal vs. Agricultural Bank of | Dalian Thermal vs. China Construction Bank | Dalian Thermal vs. Bank of China |
| Huagong Tech vs. Industrial and Commercial | Huagong Tech vs. China Construction Bank | Huagong Tech vs. Agricultural Bank of | Huagong Tech vs. Bank of China |
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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