Correlation Between China Hongqiao and Nucor Corp
Can any of the company-specific risk be diversified away by investing in both China Hongqiao and Nucor Corp 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 China Hongqiao and Nucor Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Hongqiao Group and Nucor Corp, you can compare the effects of market volatilities on China Hongqiao and Nucor Corp 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 China Hongqiao with a short position of Nucor Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Hongqiao and Nucor Corp.
Diversification Opportunities for China Hongqiao and Nucor Corp
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Nucor is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding China Hongqiao Group and Nucor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor Corp and China Hongqiao 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 China Hongqiao Group are associated (or correlated) with Nucor Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor Corp has no effect on the direction of China Hongqiao i.e., China Hongqiao and Nucor Corp go up and down completely randomly.
Pair Corralation between China Hongqiao and Nucor Corp
Assuming the 90 days horizon China Hongqiao Group is expected to generate 2.81 times more return on investment than Nucor Corp. However, China Hongqiao is 2.81 times more volatile than Nucor Corp. It trades about 0.13 of its potential returns per unit of risk. Nucor Corp is currently generating about 0.0 per unit of risk. If you would invest 34.00 in China Hongqiao Group on September 4, 2024 and sell it today you would earn a total of 132.00 from holding China Hongqiao Group or generate 388.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Hongqiao Group vs. Nucor Corp
Performance |
| Timeline |
| China Hongqiao Group |
| Nucor Corp |
China Hongqiao and Nucor Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Hongqiao and Nucor Corp
The main advantage of trading using opposite China Hongqiao and Nucor Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Hongqiao position performs unexpectedly, Nucor Corp 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 Nucor Corp will offset losses from the drop in Nucor Corp's long position.| China Hongqiao vs. Kaiser Aluminum | China Hongqiao vs. Century Aluminum | China Hongqiao vs. Constellium Nv | China Hongqiao vs. Alcoa Corp |
| Nucor Corp vs. Constellium Nv | Nucor Corp vs. Century Aluminum | Nucor Corp vs. China Hongqiao Group | Nucor Corp vs. Kaiser Aluminum |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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