Correlation Between Constellium and China Hongqiao
Can any of the company-specific risk be diversified away by investing in both Constellium and China Hongqiao 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 Constellium and China Hongqiao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellium Nv and China Hongqiao Group, you can compare the effects of market volatilities on Constellium and China Hongqiao 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 Constellium with a short position of China Hongqiao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellium and China Hongqiao.
Diversification Opportunities for Constellium and China Hongqiao
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Constellium and China is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Constellium Nv and China Hongqiao Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Hongqiao Group and Constellium 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 Constellium Nv are associated (or correlated) with China Hongqiao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Hongqiao Group has no effect on the direction of Constellium i.e., Constellium and China Hongqiao go up and down completely randomly.
Pair Corralation between Constellium and China Hongqiao
Given the investment horizon of 90 days Constellium Nv is expected to under-perform the China Hongqiao. In addition to that, Constellium is 1.33 times more volatile than China Hongqiao Group. It trades about -0.08 of its total potential returns per unit of risk. China Hongqiao Group is currently generating about 0.1 per unit of volatility. If you would invest 824.00 in China Hongqiao Group on November 5, 2024 and sell it today you would earn a total of 502.00 from holding China Hongqiao Group or generate 60.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Constellium Nv vs. China Hongqiao Group
Performance |
| Timeline |
| Constellium Nv |
| China Hongqiao Group |
Constellium and China Hongqiao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellium and China Hongqiao
The main advantage of trading using opposite Constellium and China Hongqiao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellium position performs unexpectedly, China Hongqiao 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 Hongqiao will offset losses from the drop in China Hongqiao's long position.| Constellium vs. Century Aluminum | Constellium vs. Alcoa Corp | Constellium vs. China Hongqiao Group | Constellium vs. Norsk Hydro ASA |
| China Hongqiao vs. Constellium Nv | China Hongqiao vs. Century Aluminum | China Hongqiao vs. Alcoa Corp | China Hongqiao vs. China Hongqiao Group |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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