Correlation Between Hooker Furniture and China Coal
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture and China Coal 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 Hooker Furniture and China Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and China Coal Energy, you can compare the effects of market volatilities on Hooker Furniture and China Coal 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 Hooker Furniture with a short position of China Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and China Coal.
Diversification Opportunities for Hooker Furniture and China Coal
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hooker and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and China Coal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Coal Energy and Hooker Furniture 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 Hooker Furniture are associated (or correlated) with China Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Coal Energy has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and China Coal go up and down completely randomly.
Pair Corralation between Hooker Furniture and China Coal
Given the investment horizon of 90 days Hooker Furniture is expected to generate 3.21 times less return on investment than China Coal. But when comparing it to its historical volatility, Hooker Furniture is 2.12 times less risky than China Coal. It trades about 0.03 of its potential returns per unit of risk. China Coal Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,610 in China Coal Energy on September 1, 2024 and sell it today you would earn a total of 750.00 from holding China Coal Energy or generate 46.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. China Coal Energy
Performance |
| Timeline |
| Hooker Furniture |
| China Coal Energy |
Hooker Furniture and China Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and China Coal
The main advantage of trading using opposite Hooker Furniture and China Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, China Coal 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 China Coal will offset losses from the drop in China Coal's long position.| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Willis Lease Finance | Hooker Furniture vs. Rocky Brands | Hooker Furniture vs. First Business Financial |
| China Coal vs. Yuexiu Transport Infrastructure | China Coal vs. Academy Sports Outdoors | China Coal vs. Hooker Furniture | China Coal vs. NioCorp Developments Ltd |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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