Correlation Between HP and China Dongsheng
Can any of the company-specific risk be diversified away by investing in both HP and China Dongsheng 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 HP and China Dongsheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and China Dongsheng International, you can compare the effects of market volatilities on HP and China Dongsheng 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 HP with a short position of China Dongsheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and China Dongsheng.
Diversification Opportunities for HP and China Dongsheng
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between HP and China is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and China Dongsheng International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Dongsheng Inte and HP 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 HP Inc are associated (or correlated) with China Dongsheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Dongsheng Inte has no effect on the direction of HP i.e., HP and China Dongsheng go up and down completely randomly.
Pair Corralation between HP and China Dongsheng
Considering the 90-day investment horizon HP Inc is expected to under-perform the China Dongsheng. But the stock apears to be less risky and, when comparing its historical volatility, HP Inc is 8.37 times less risky than China Dongsheng. The stock trades about -0.01 of its potential returns per unit of risk. The China Dongsheng International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3.53 in China Dongsheng International on January 6, 2025 and sell it today you would lose (3.29) from holding China Dongsheng International or give up 93.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.71% |
| Values | Daily Returns |
HP Inc vs. China Dongsheng International
Performance |
| Timeline |
| HP Inc |
| China Dongsheng Inte |
HP and China Dongsheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and China Dongsheng
The main advantage of trading using opposite HP and China Dongsheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, China Dongsheng 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 Dongsheng will offset losses from the drop in China Dongsheng's long position.| HP vs. Farmmi Inc | HP vs. Sonnet Biotherapeutics Holdings | HP vs. Aquagold International | HP vs. Morningstar Unconstrained Allocation |
| China Dongsheng vs. C2E Energy | China Dongsheng vs. Tanke Biosciences | China Dongsheng vs. Supurva Healthcare Group | China Dongsheng vs. Kasten Inc |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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