Correlation Between Hongli Group and Rayonier Advanced
Can any of the company-specific risk be diversified away by investing in both Hongli Group and Rayonier Advanced 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 Hongli Group and Rayonier Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hongli Group Ordinary and Rayonier Advanced Materials, you can compare the effects of market volatilities on Hongli Group and Rayonier Advanced 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 Hongli Group with a short position of Rayonier Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongli Group and Rayonier Advanced.
Diversification Opportunities for Hongli Group and Rayonier Advanced
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hongli and Rayonier is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hongli Group Ordinary and Rayonier Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier Advanced and Hongli Group 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 Hongli Group Ordinary are associated (or correlated) with Rayonier Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayonier Advanced has no effect on the direction of Hongli Group i.e., Hongli Group and Rayonier Advanced go up and down completely randomly.
Pair Corralation between Hongli Group and Rayonier Advanced
Considering the 90-day investment horizon Hongli Group is expected to generate 1.79 times less return on investment than Rayonier Advanced. In addition to that, Hongli Group is 1.99 times more volatile than Rayonier Advanced Materials. It trades about 0.02 of its total potential returns per unit of risk. Rayonier Advanced Materials is currently generating about 0.07 per unit of volatility. If you would invest 440.00 in Rayonier Advanced Materials on August 31, 2024 and sell it today you would earn a total of 441.00 from holding Rayonier Advanced Materials or generate 100.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hongli Group Ordinary vs. Rayonier Advanced Materials
Performance |
| Timeline |
| Hongli Group Ordinary |
| Rayonier Advanced |
Hongli Group and Rayonier Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hongli Group and Rayonier Advanced
The main advantage of trading using opposite Hongli Group and Rayonier Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hongli Group position performs unexpectedly, Rayonier Advanced 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 Rayonier Advanced will offset losses from the drop in Rayonier Advanced's long position.| Hongli Group vs. ArcelorMittal SA ADR | Hongli Group vs. Reliance Steel Aluminum | Hongli Group vs. Ternium SA ADR | Hongli Group vs. Worthington Steel |
| Rayonier Advanced vs. Methanex | Rayonier Advanced vs. AdvanSix | Rayonier Advanced vs. Green Plains Renewable | Rayonier Advanced vs. Tronox Holdings PLC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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