Correlation Between Dairy Farm and Hua Hong
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and Hua Hong 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 Dairy Farm and Hua Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and Hua Hong Semiconductor, you can compare the effects of market volatilities on Dairy Farm and Hua Hong 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 Dairy Farm with a short position of Hua Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Hua Hong.
Diversification Opportunities for Dairy Farm and Hua Hong
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dairy and Hua is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and Hua Hong Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Hong Semiconductor and Dairy Farm 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 Dairy Farm International are associated (or correlated) with Hua Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Hong Semiconductor has no effect on the direction of Dairy Farm i.e., Dairy Farm and Hua Hong go up and down completely randomly.
Pair Corralation between Dairy Farm and Hua Hong
Assuming the 90 days trading horizon Dairy Farm International is expected to under-perform the Hua Hong. But the stock apears to be less risky and, when comparing its historical volatility, Dairy Farm International is 1.04 times less risky than Hua Hong. The stock trades about -0.08 of its potential returns per unit of risk. The Hua Hong Semiconductor is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 252.00 in Hua Hong Semiconductor on November 3, 2024 and sell it today you would earn a total of 28.00 from holding Hua Hong Semiconductor or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dairy Farm International vs. Hua Hong Semiconductor
Performance |
| Timeline |
| Dairy Farm International |
| Hua Hong Semiconductor |
Dairy Farm and Hua Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and Hua Hong
The main advantage of trading using opposite Dairy Farm and Hua Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, Hua Hong 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 Hua Hong will offset losses from the drop in Hua Hong's long position.| Dairy Farm vs. SEI INVESTMENTS | Dairy Farm vs. CAL MAINE FOODS | Dairy Farm vs. DIVERSIFIED ROYALTY | Dairy Farm vs. Fevertree Drinks PLC |
| Hua Hong vs. PLAYMATES TOYS | Hua Hong vs. QINGCI GAMES INC | Hua Hong vs. Tower Semiconductor | Hua Hong vs. ON SEMICONDUCTOR |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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