Correlation Between Byggmax Group and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both Byggmax Group and CHINA HUARONG 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 Byggmax Group and CHINA HUARONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byggmax Group AB and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on Byggmax Group and CHINA HUARONG 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 Byggmax Group with a short position of CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byggmax Group and CHINA HUARONG.
Diversification Opportunities for Byggmax Group and CHINA HUARONG
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Byggmax and CHINA is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Byggmax Group AB and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD and Byggmax Group 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 Byggmax Group AB are associated (or correlated) with CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of Byggmax Group i.e., Byggmax Group and CHINA HUARONG go up and down completely randomly.
Pair Corralation between Byggmax Group and CHINA HUARONG
Assuming the 90 days horizon Byggmax Group is expected to generate 26.33 times less return on investment than CHINA HUARONG. But when comparing it to its historical volatility, Byggmax Group AB is 10.79 times less risky than CHINA HUARONG. It trades about 0.03 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.35 in CHINA HUARONG ENERHD 50 on September 3, 2024 and sell it today you would lose (0.20) from holding CHINA HUARONG ENERHD 50 or give up 57.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byggmax Group AB vs. CHINA HUARONG ENERHD 50
Performance |
| Timeline |
| Byggmax Group AB |
| CHINA HUARONG ENERHD |
Byggmax Group and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byggmax Group and CHINA HUARONG
The main advantage of trading using opposite Byggmax Group and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byggmax Group position performs unexpectedly, CHINA HUARONG 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 HUARONG will offset losses from the drop in CHINA HUARONG's long position.| Byggmax Group vs. Lowes Companies | Byggmax Group vs. Haverty Furniture Companies | Byggmax Group vs. Superior Plus Corp | Byggmax Group vs. NMI Holdings |
| CHINA HUARONG vs. Waste Management | CHINA HUARONG vs. National Health Investors | CHINA HUARONG vs. Apollo Investment Corp | CHINA HUARONG vs. FEMALE HEALTH |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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