Correlation Between Embrace Change and Hong Yuan
Can any of the company-specific risk be diversified away by investing in both Embrace Change and Hong Yuan 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 Embrace Change and Hong Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embrace Change Acquisition and Hong Yuan Holding, you can compare the effects of market volatilities on Embrace Change and Hong Yuan 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 Embrace Change with a short position of Hong Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Hong Yuan.
Diversification Opportunities for Embrace Change and Hong Yuan
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Embrace and Hong is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Hong Yuan Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Yuan Holding and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with Hong Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Yuan Holding has no effect on the direction of Embrace Change i.e., Embrace Change and Hong Yuan go up and down completely randomly.
Pair Corralation between Embrace Change and Hong Yuan
Given the investment horizon of 90 days Embrace Change is expected to generate 175.87 times less return on investment than Hong Yuan. But when comparing it to its historical volatility, Embrace Change Acquisition is 185.9 times less risky than Hong Yuan. It trades about 0.14 of its potential returns per unit of risk. Hong Yuan Holding is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Hong Yuan Holding on September 3, 2024 and sell it today you would lose (2.58) from holding Hong Yuan Holding or give up 51.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.43% |
| Values | Daily Returns |
Embrace Change Acquisition vs. Hong Yuan Holding
Performance |
| Timeline |
| Embrace Change Acqui |
| Hong Yuan Holding |
Embrace Change and Hong Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embrace Change and Hong Yuan
The main advantage of trading using opposite Embrace Change and Hong Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change position performs unexpectedly, Hong Yuan 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 Hong Yuan will offset losses from the drop in Hong Yuan's long position.| Embrace Change vs. Absolute Health and | Embrace Change vs. Supurva Healthcare Group | Embrace Change vs. TransAKT | Embrace Change vs. HUMANA INC |
| Hong Yuan vs. Manaris Corp | Hong Yuan vs. Green Planet Bio | Hong Yuan vs. Continental Beverage Brands | Hong Yuan vs. Opus Magnum Ameris |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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