Correlation Between Anhui Huaheng and China Building
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By analyzing existing cross correlation between Anhui Huaheng Biotechnology and China Building Material, you can compare the effects of market volatilities on Anhui Huaheng and China Building 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 Anhui Huaheng with a short position of China Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Huaheng and China Building.
Diversification Opportunities for Anhui Huaheng and China Building
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Anhui and China is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Huaheng Biotechnology and China Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Building Material and Anhui Huaheng 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 Anhui Huaheng Biotechnology are associated (or correlated) with China Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Building Material has no effect on the direction of Anhui Huaheng i.e., Anhui Huaheng and China Building go up and down completely randomly.
Pair Corralation between Anhui Huaheng and China Building
Assuming the 90 days trading horizon Anhui Huaheng Biotechnology is expected to generate 0.6 times more return on investment than China Building. However, Anhui Huaheng Biotechnology is 1.68 times less risky than China Building. It trades about -0.05 of its potential returns per unit of risk. China Building Material is currently generating about -0.08 per unit of risk. If you would invest 7,652 in Anhui Huaheng Biotechnology on November 9, 2024 and sell it today you would lose (4,880) from holding Anhui Huaheng Biotechnology or give up 63.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 18.53% |
| Values | Daily Returns |
Anhui Huaheng Biotechnology vs. China Building Material
Performance |
| Timeline |
| Anhui Huaheng Biotec |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| China Building Material |
Risk-Adjusted Performance
Excellent
Weak | Strong |
Anhui Huaheng and China Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anhui Huaheng and China Building
The main advantage of trading using opposite Anhui Huaheng and China Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Huaheng position performs unexpectedly, China Building 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 China Building will offset losses from the drop in China Building's long position.The idea behind Anhui Huaheng Biotechnology and China Building Material 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.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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