Correlation Between Chuangs China and Hilltop Holdings
Can any of the company-specific risk be diversified away by investing in both Chuangs China and Hilltop Holdings 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 Chuangs China and Hilltop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chuangs China Investments and Hilltop Holdings, you can compare the effects of market volatilities on Chuangs China and Hilltop Holdings 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 Chuangs China with a short position of Hilltop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Hilltop Holdings.
Diversification Opportunities for Chuangs China and Hilltop Holdings
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chuangs and Hilltop is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and Hilltop Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilltop Holdings and Chuangs China 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 Chuangs China Investments are associated (or correlated) with Hilltop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilltop Holdings has no effect on the direction of Chuangs China i.e., Chuangs China and Hilltop Holdings go up and down completely randomly.
Pair Corralation between Chuangs China and Hilltop Holdings
Assuming the 90 days horizon Chuangs China Investments is expected to generate 3.35 times more return on investment than Hilltop Holdings. However, Chuangs China is 3.35 times more volatile than Hilltop Holdings. It trades about 0.01 of its potential returns per unit of risk. Hilltop Holdings is currently generating about 0.01 per unit of risk. If you would invest 1.40 in Chuangs China Investments on September 5, 2024 and sell it today you would lose (0.40) from holding Chuangs China Investments or give up 28.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chuangs China Investments vs. Hilltop Holdings
Performance |
| Timeline |
| Chuangs China Investments |
| Hilltop Holdings |
Chuangs China and Hilltop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and Hilltop Holdings
The main advantage of trading using opposite Chuangs China and Hilltop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, Hilltop Holdings 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 Hilltop Holdings will offset losses from the drop in Hilltop Holdings' long position.| Chuangs China vs. Hongkong Land Holdings | Chuangs China vs. Superior Plus Corp | Chuangs China vs. NMI Holdings | Chuangs China vs. Origin Agritech |
| Hilltop Holdings vs. Genco Shipping Trading | Hilltop Holdings vs. HK Electric Investments | Hilltop Holdings vs. Chuangs China Investments | Hilltop Holdings vs. SEI INVESTMENTS |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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