Correlation Between Guangdong Investment and Hua Hong
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment 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 Guangdong Investment and Hua Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Investment Limited and Hua Hong Semiconductor, you can compare the effects of market volatilities on Guangdong Investment 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 Guangdong Investment with a short position of Hua Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Hua Hong.
Diversification Opportunities for Guangdong Investment and Hua Hong
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Guangdong and Hua is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited 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 Guangdong Investment 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 Guangdong Investment Limited 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 Guangdong Investment i.e., Guangdong Investment and Hua Hong go up and down completely randomly.
Pair Corralation between Guangdong Investment and Hua Hong
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 1.9 times more return on investment than Hua Hong. However, Guangdong Investment is 1.9 times more volatile than Hua Hong Semiconductor. It trades about 0.07 of its potential returns per unit of risk. Hua Hong Semiconductor is currently generating about 0.01 per unit of risk. If you would invest 16.00 in Guangdong Investment Limited on October 27, 2024 and sell it today you would earn a total of 54.00 from holding Guangdong Investment Limited or generate 337.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Hua Hong Semiconductor
Performance |
| Timeline |
| Guangdong Investment |
| Hua Hong Semiconductor |
Guangdong Investment and Hua Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Hua Hong
The main advantage of trading using opposite Guangdong Investment and Hua Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment 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.| Guangdong Investment vs. COSMOSTEEL HLDGS | Guangdong Investment vs. Insteel Industries | Guangdong Investment vs. TOREX SEMICONDUCTOR LTD | Guangdong Investment vs. ELL ENVIRONHLDGS HD 0001 |
| Hua Hong vs. RCS MediaGroup SpA | Hua Hong vs. RYANAIR HLDGS ADR | Hua Hong vs. Air New Zealand | Hua Hong vs. DELTA AIR LINES |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |