Correlation Between Hanesbrands and Beijing Tong
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Beijing Tong 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 Hanesbrands and Beijing Tong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Beijing Tong Ren, you can compare the effects of market volatilities on Hanesbrands and Beijing Tong 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 Hanesbrands with a short position of Beijing Tong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Beijing Tong.
Diversification Opportunities for Hanesbrands and Beijing Tong
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanesbrands and Beijing is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Beijing Tong Ren in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Tong Ren and Hanesbrands 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 Hanesbrands are associated (or correlated) with Beijing Tong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Tong Ren has no effect on the direction of Hanesbrands i.e., Hanesbrands and Beijing Tong go up and down completely randomly.
Pair Corralation between Hanesbrands and Beijing Tong
Considering the 90-day investment horizon Hanesbrands is expected to generate 2.83 times more return on investment than Beijing Tong. However, Hanesbrands is 2.83 times more volatile than Beijing Tong Ren. It trades about 0.22 of its potential returns per unit of risk. Beijing Tong Ren is currently generating about 0.15 per unit of risk. If you would invest 712.00 in Hanesbrands on September 5, 2024 and sell it today you would earn a total of 155.00 from holding Hanesbrands or generate 21.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanesbrands vs. Beijing Tong Ren
Performance |
| Timeline |
| Hanesbrands |
| Beijing Tong Ren |
Hanesbrands and Beijing Tong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and Beijing Tong
The main advantage of trading using opposite Hanesbrands and Beijing Tong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Beijing Tong 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 Beijing Tong will offset losses from the drop in Beijing Tong's long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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