Correlation Between HomeToGo and China Shenhua
Can any of the company-specific risk be diversified away by investing in both HomeToGo and China Shenhua 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 HomeToGo and China Shenhua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeToGo SE and China Shenhua Energy, you can compare the effects of market volatilities on HomeToGo and China Shenhua 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 HomeToGo with a short position of China Shenhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and China Shenhua.
Diversification Opportunities for HomeToGo and China Shenhua
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HomeToGo and China is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and China Shenhua Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Shenhua Energy and HomeToGo 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 HomeToGo SE are associated (or correlated) with China Shenhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Shenhua Energy has no effect on the direction of HomeToGo i.e., HomeToGo and China Shenhua go up and down completely randomly.
Pair Corralation between HomeToGo and China Shenhua
Assuming the 90 days trading horizon HomeToGo is expected to generate 8.02 times less return on investment than China Shenhua. But when comparing it to its historical volatility, HomeToGo SE is 3.05 times less risky than China Shenhua. It trades about 0.03 of its potential returns per unit of risk. China Shenhua Energy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 211.00 in China Shenhua Energy on September 13, 2024 and sell it today you would earn a total of 206.00 from holding China Shenhua Energy or generate 97.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeToGo SE vs. China Shenhua Energy
Performance |
| Timeline |
| HomeToGo SE |
| China Shenhua Energy |
HomeToGo and China Shenhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeToGo and China Shenhua
The main advantage of trading using opposite HomeToGo and China Shenhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo position performs unexpectedly, China Shenhua 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 Shenhua will offset losses from the drop in China Shenhua's long position.| HomeToGo vs. DICKS Sporting Goods | HomeToGo vs. USWE SPORTS AB | HomeToGo vs. Transport International Holdings | HomeToGo vs. JD SPORTS FASH |
| China Shenhua vs. PT Bayan Resources | China Shenhua vs. Yanzhou Coal Mining | China Shenhua vs. Yanzhou Coal Mining | China Shenhua vs. PT Adaro Energy |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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