Correlation Between Aofu Environmental and Huadong Medicine
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By analyzing existing cross correlation between Aofu Environmental Technology and Huadong Medicine Co, you can compare the effects of market volatilities on Aofu Environmental 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 Aofu Environmental with a short position of Huadong Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aofu Environmental and Huadong Medicine.
Diversification Opportunities for Aofu Environmental and Huadong Medicine
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aofu and Huadong is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aofu Environmental Technology and Huadong Medicine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huadong Medicine and Aofu Environmental 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 Aofu Environmental Technology 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 Aofu Environmental i.e., Aofu Environmental and Huadong Medicine go up and down completely randomly.
Pair Corralation between Aofu Environmental and Huadong Medicine
Assuming the 90 days trading horizon Aofu Environmental Technology is expected to under-perform the Huadong Medicine. In addition to that, Aofu Environmental is 1.39 times more volatile than Huadong Medicine Co. It trades about -0.04 of its total potential returns per unit of risk. Huadong Medicine Co is currently generating about -0.02 per unit of volatility. If you would invest 3,381 in Huadong Medicine Co on October 14, 2024 and sell it today you would lose (118.00) from holding Huadong Medicine Co or give up 3.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aofu Environmental Technology vs. Huadong Medicine Co
Performance |
| Timeline |
| Aofu Environmental |
| Huadong Medicine |
Aofu Environmental and Huadong Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aofu Environmental and Huadong Medicine
The main advantage of trading using opposite Aofu Environmental and Huadong Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aofu Environmental 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.| Aofu Environmental vs. Penyao Environmental Protection | Aofu Environmental vs. Shenwu Energy Saving | Aofu Environmental vs. Shenzhen MYS Environmental | Aofu Environmental vs. GreenTech Environmental Co |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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