Correlation Between Essentra Plc and Huabao International
Can any of the company-specific risk be diversified away by investing in both Essentra Plc and Huabao International 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 Essentra Plc and Huabao International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essentra Plc and Huabao International Holdings, you can compare the effects of market volatilities on Essentra Plc and Huabao International 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 Essentra Plc with a short position of Huabao International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essentra Plc and Huabao International.
Diversification Opportunities for Essentra Plc and Huabao International
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Essentra and Huabao is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Essentra Plc and Huabao International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huabao International and Essentra Plc 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 Essentra Plc are associated (or correlated) with Huabao International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huabao International has no effect on the direction of Essentra Plc i.e., Essentra Plc and Huabao International go up and down completely randomly.
Pair Corralation between Essentra Plc and Huabao International
If you would invest 26.00 in Huabao International Holdings on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Huabao International Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Essentra Plc vs. Huabao International Holdings
Performance |
| Timeline |
| Essentra Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Huabao International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Essentra Plc and Huabao International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essentra Plc and Huabao International
The main advantage of trading using opposite Essentra Plc and Huabao International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essentra Plc position performs unexpectedly, Huabao International 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 Huabao International will offset losses from the drop in Huabao International's long position.| Essentra Plc vs. LyondellBasell Industries NV | Essentra Plc vs. International Flavors Fragrances | Essentra Plc vs. Cabot | Essentra Plc vs. Westlake Chemical |
| Huabao International vs. HEXPOL AB | Huabao International vs. Nitto Denko | Huabao International vs. Sasol | Huabao International vs. Eastman Chemical |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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