Correlation Between Affiliated Resources and Hong Yuan
Can any of the company-specific risk be diversified away by investing in both Affiliated Resources and Hong Yuan at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Affiliated Resources and Hong Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affiliated Resources Corp and Hong Yuan Holding, you can compare the effects of market volatilities on Affiliated Resources and Hong Yuan 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 Affiliated Resources with a short position of Hong Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Resources and Hong Yuan.
Diversification Opportunities for Affiliated Resources and Hong Yuan
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Affiliated and Hong is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Resources Corp and Hong Yuan Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Yuan Holding and Affiliated Resources 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 Affiliated Resources Corp are associated (or correlated) with Hong Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Yuan Holding has no effect on the direction of Affiliated Resources i.e., Affiliated Resources and Hong Yuan go up and down completely randomly.
Pair Corralation between Affiliated Resources and Hong Yuan
Given the investment horizon of 90 days Affiliated Resources is expected to generate 9.83 times less return on investment than Hong Yuan. But when comparing it to its historical volatility, Affiliated Resources Corp is 2.01 times less risky than Hong Yuan. It trades about 0.02 of its potential returns per unit of risk. Hong Yuan Holding is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Hong Yuan Holding on October 24, 2024 and sell it today you would lose (2.00) from holding Hong Yuan Holding or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Affiliated Resources Corp vs. Hong Yuan Holding
Performance |
| Timeline |
| Affiliated Resources Corp |
| Hong Yuan Holding |
Affiliated Resources and Hong Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affiliated Resources and Hong Yuan
The main advantage of trading using opposite Affiliated Resources and Hong Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Resources position performs unexpectedly, Hong Yuan 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 Hong Yuan will offset losses from the drop in Hong Yuan's long position.| Affiliated Resources vs. Catalyst Bancorp | Affiliated Resources vs. Lindblad Expeditions Holdings | Affiliated Resources vs. Norfolk Southern | Affiliated Resources vs. Canlan Ice Sports |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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