Correlation Between Empire State and Hung Chou
Can any of the company-specific risk be diversified away by investing in both Empire State and Hung Chou 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 Empire State and Hung Chou into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and Hung Chou Fiber, you can compare the effects of market volatilities on Empire State and Hung Chou 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 Empire State with a short position of Hung Chou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Hung Chou.
Diversification Opportunities for Empire State and Hung Chou
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Empire and Hung is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Hung Chou Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Chou Fiber and Empire State 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 Empire State Realty are associated (or correlated) with Hung Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Chou Fiber has no effect on the direction of Empire State i.e., Empire State and Hung Chou go up and down completely randomly.
Pair Corralation between Empire State and Hung Chou
Given the investment horizon of 90 days Empire State Realty is expected to generate 1.53 times more return on investment than Hung Chou. However, Empire State is 1.53 times more volatile than Hung Chou Fiber. It trades about 0.02 of its potential returns per unit of risk. Hung Chou Fiber is currently generating about 0.04 per unit of risk. If you would invest 770.00 in Empire State Realty on November 28, 2024 and sell it today you would earn a total of 112.50 from holding Empire State Realty or generate 14.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.57% |
| Values | Daily Returns |
Empire State Realty vs. Hung Chou Fiber
Performance |
| Timeline |
| Empire State Realty |
| Hung Chou Fiber |
Empire State and Hung Chou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Hung Chou
The main advantage of trading using opposite Empire State and Hung Chou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Hung Chou 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 Hung Chou will offset losses from the drop in Hung Chou's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Hung Chou vs. Huang Hsiang Construction | Hung Chou vs. Shieh Yih Machinery | Hung Chou vs. FDC International Hotels | Hung Chou vs. FarGlory Hotel Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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