Correlation Between Hangzhou Huawang and Huadong Medicine
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By analyzing existing cross correlation between Hangzhou Huawang New and Huadong Medicine Co, you can compare the effects of market volatilities on Hangzhou Huawang and Huadong Medicine 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 Hangzhou Huawang with a short position of Huadong Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hangzhou Huawang and Huadong Medicine.
Diversification Opportunities for Hangzhou Huawang and Huadong Medicine
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hangzhou and Huadong is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou Huawang New and Huadong Medicine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huadong Medicine and Hangzhou Huawang 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 Hangzhou Huawang New are associated (or correlated) with Huadong Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huadong Medicine has no effect on the direction of Hangzhou Huawang i.e., Hangzhou Huawang and Huadong Medicine go up and down completely randomly.
Pair Corralation between Hangzhou Huawang and Huadong Medicine
Assuming the 90 days trading horizon Hangzhou Huawang New is expected to generate 1.01 times more return on investment than Huadong Medicine. However, Hangzhou Huawang is 1.01 times more volatile than Huadong Medicine Co. It trades about -0.18 of its potential returns per unit of risk. Huadong Medicine Co is currently generating about -0.33 per unit of risk. If you would invest 1,330 in Hangzhou Huawang New on October 14, 2024 and sell it today you would lose (86.00) from holding Hangzhou Huawang New or give up 6.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hangzhou Huawang New vs. Huadong Medicine Co
Performance |
| Timeline |
| Hangzhou Huawang New |
| Huadong Medicine |
Hangzhou Huawang and Huadong Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hangzhou Huawang and Huadong Medicine
The main advantage of trading using opposite Hangzhou Huawang and Huadong Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hangzhou Huawang position performs unexpectedly, Huadong Medicine 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 Huadong Medicine will offset losses from the drop in Huadong Medicine's long position.| Hangzhou Huawang vs. Zijin Mining Group | Hangzhou Huawang vs. Wanhua Chemical Group | Hangzhou Huawang vs. Baoshan Iron Steel | Hangzhou Huawang vs. Shandong Gold Mining |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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