Correlation Between China Mobile and H FARM
Can any of the company-specific risk be diversified away by investing in both China Mobile and H FARM 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 Mobile and H FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Life Insurance and H FARM SPA, you can compare the effects of market volatilities on China Mobile and H FARM 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 Mobile with a short position of H FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and H FARM.
Diversification Opportunities for China Mobile and H FARM
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and 5JQ is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA and China Mobile 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 Life Insurance are associated (or correlated) with H FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of China Mobile i.e., China Mobile and H FARM go up and down completely randomly.
Pair Corralation between China Mobile and H FARM
Assuming the 90 days horizon China Mobile is expected to generate 2.47 times less return on investment than H FARM. But when comparing it to its historical volatility, China Life Insurance is 2.06 times less risky than H FARM. It trades about 0.02 of its potential returns per unit of risk. H FARM SPA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12.00 in H FARM SPA on September 15, 2024 and sell it today you would earn a total of 0.00 from holding H FARM SPA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Life Insurance vs. H FARM SPA
Performance |
| Timeline |
| China Life Insurance |
| H FARM SPA |
China Mobile and H FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mobile and H FARM
The main advantage of trading using opposite China Mobile and H FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mobile position performs unexpectedly, H FARM 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 H FARM will offset losses from the drop in H FARM's long position.| China Mobile vs. H FARM SPA | China Mobile vs. HEMISPHERE EGY | China Mobile vs. Chongqing Machinery Electric | China Mobile vs. Iridium Communications |
| H FARM vs. Ameriprise Financial | H FARM vs. Ares Management Corp | H FARM vs. Superior Plus Corp | H FARM vs. SIVERS SEMICONDUCTORS AB |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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