Correlation Between China BlueChemical and Hanison Construction
Can any of the company-specific risk be diversified away by investing in both China BlueChemical and Hanison Construction 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 China BlueChemical and Hanison Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and Hanison Construction Holdings, you can compare the effects of market volatilities on China BlueChemical and Hanison Construction 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 China BlueChemical with a short position of Hanison Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and Hanison Construction.
Diversification Opportunities for China BlueChemical and Hanison Construction
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Hanison is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and Hanison Construction Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanison Construction and China BlueChemical 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 China BlueChemical are associated (or correlated) with Hanison Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanison Construction has no effect on the direction of China BlueChemical i.e., China BlueChemical and Hanison Construction go up and down completely randomly.
Pair Corralation between China BlueChemical and Hanison Construction
Assuming the 90 days horizon China BlueChemical is expected to generate 1.44 times less return on investment than Hanison Construction. In addition to that, China BlueChemical is 1.54 times more volatile than Hanison Construction Holdings. It trades about 0.02 of its total potential returns per unit of risk. Hanison Construction Holdings is currently generating about 0.05 per unit of volatility. If you would invest 8.53 in Hanison Construction Holdings on December 4, 2024 and sell it today you would earn a total of 5.47 from holding Hanison Construction Holdings or generate 64.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China BlueChemical vs. Hanison Construction Holdings
Performance |
| Timeline |
| China BlueChemical |
| Hanison Construction |
China BlueChemical and Hanison Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and Hanison Construction
The main advantage of trading using opposite China BlueChemical and Hanison Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical position performs unexpectedly, Hanison Construction 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 Hanison Construction will offset losses from the drop in Hanison Construction's long position.The idea behind China BlueChemical and Hanison Construction Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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