Correlation Between China Hongqiao and United States
Can any of the company-specific risk be diversified away by investing in both China Hongqiao and United States 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 United States 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 United States Steel, you can compare the effects of market volatilities on China Hongqiao and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Hongqiao and United States.
Diversification Opportunities for China Hongqiao and United States
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and United is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Hongqiao Group and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of China Hongqiao i.e., China Hongqiao and United States go up and down completely randomly.
Pair Corralation between China Hongqiao and United States
Assuming the 90 days horizon China Hongqiao Group is expected to generate 3.08 times more return on investment than United States. However, China Hongqiao is 3.08 times more volatile than United States Steel. It trades about 0.24 of its potential returns per unit of risk. United States Steel is currently generating about 0.11 per unit of risk. If you would invest 107.00 in China Hongqiao Group on September 4, 2024 and sell it today you would earn a total of 59.00 from holding China Hongqiao Group or generate 55.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Hongqiao Group vs. United States Steel
Performance |
| Timeline |
| China Hongqiao Group |
| United States Steel |
China Hongqiao and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Hongqiao and United States
The main advantage of trading using opposite China Hongqiao and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Hongqiao position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| China Hongqiao vs. Kaiser Aluminum | China Hongqiao vs. Century Aluminum | China Hongqiao vs. Constellium Nv | China Hongqiao vs. Alcoa Corp |
| United States vs. Constellium Nv | United States vs. Century Aluminum | United States vs. China Hongqiao Group | United States 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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