Correlation Between Hengdian Entertainment and Guangzhou Haige
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By analyzing existing cross correlation between Hengdian Entertainment Co and Guangzhou Haige Communications, you can compare the effects of market volatilities on Hengdian Entertainment and Guangzhou Haige 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 Hengdian Entertainment with a short position of Guangzhou Haige. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengdian Entertainment and Guangzhou Haige.
Diversification Opportunities for Hengdian Entertainment and Guangzhou Haige
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hengdian and Guangzhou is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hengdian Entertainment Co and Guangzhou Haige Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Haige Comm and Hengdian Entertainment 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 Hengdian Entertainment Co are associated (or correlated) with Guangzhou Haige. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Haige Comm has no effect on the direction of Hengdian Entertainment i.e., Hengdian Entertainment and Guangzhou Haige go up and down completely randomly.
Pair Corralation between Hengdian Entertainment and Guangzhou Haige
Assuming the 90 days trading horizon Hengdian Entertainment Co is expected to under-perform the Guangzhou Haige. In addition to that, Hengdian Entertainment is 1.69 times more volatile than Guangzhou Haige Communications. It trades about -0.34 of its total potential returns per unit of risk. Guangzhou Haige Communications is currently generating about -0.39 per unit of volatility. If you would invest 1,206 in Guangzhou Haige Communications on October 17, 2024 and sell it today you would lose (205.00) from holding Guangzhou Haige Communications or give up 17.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hengdian Entertainment Co vs. Guangzhou Haige Communications
Performance |
| Timeline |
| Hengdian Entertainment |
| Guangzhou Haige Comm |
Hengdian Entertainment and Guangzhou Haige Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hengdian Entertainment and Guangzhou Haige
The main advantage of trading using opposite Hengdian Entertainment and Guangzhou Haige positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengdian Entertainment position performs unexpectedly, Guangzhou Haige 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 Guangzhou Haige will offset losses from the drop in Guangzhou Haige's long position.The idea behind Hengdian Entertainment Co and Guangzhou Haige Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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