Correlation Between Hua Hong and Xinke Material
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By analyzing existing cross correlation between Hua Hong Semiconductor and Xinke Material, you can compare the effects of market volatilities on Hua Hong and Xinke Material 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 Hua Hong with a short position of Xinke Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and Xinke Material.
Diversification Opportunities for Hua Hong and Xinke Material
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hua and Xinke is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and Xinke Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinke Material and Hua Hong 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 Hua Hong Semiconductor are associated (or correlated) with Xinke Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinke Material has no effect on the direction of Hua Hong i.e., Hua Hong and Xinke Material go up and down completely randomly.
Pair Corralation between Hua Hong and Xinke Material
Assuming the 90 days trading horizon Hua Hong Semiconductor is expected to generate 1.7 times more return on investment than Xinke Material. However, Hua Hong is 1.7 times more volatile than Xinke Material. It trades about 0.11 of its potential returns per unit of risk. Xinke Material is currently generating about -0.01 per unit of risk. If you would invest 4,925 in Hua Hong Semiconductor on December 8, 2024 and sell it today you would earn a total of 514.00 from holding Hua Hong Semiconductor or generate 10.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Hong Semiconductor vs. Xinke Material
Performance |
| Timeline |
| Hua Hong Semiconductor |
| Xinke Material |
Hua Hong and Xinke Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Hong and Xinke Material
The main advantage of trading using opposite Hua Hong and Xinke Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Hong position performs unexpectedly, Xinke Material 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 Xinke Material will offset losses from the drop in Xinke Material's long position.| Hua Hong vs. Jilin Chemical Fibre | ||
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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