Correlation Between Huabao International and Essentra Plc
Can any of the company-specific risk be diversified away by investing in both Huabao International and Essentra Plc 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 Huabao International and Essentra Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huabao International Holdings and Essentra Plc, you can compare the effects of market volatilities on Huabao International and Essentra Plc 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 Huabao International with a short position of Essentra Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huabao International and Essentra Plc.
Diversification Opportunities for Huabao International and Essentra Plc
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Huabao and Essentra is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Huabao International Holdings and Essentra Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essentra Plc and Huabao International 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 Huabao International Holdings are associated (or correlated) with Essentra Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essentra Plc has no effect on the direction of Huabao International i.e., Huabao International and Essentra Plc go up and down completely randomly.
Pair Corralation between Huabao International and Essentra Plc
If you would invest 215.00 in Essentra Plc on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Essentra Plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huabao International Holdings vs. Essentra Plc
Performance |
| Timeline |
| Huabao International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Essentra Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Huabao International and Essentra Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huabao International and Essentra Plc
The main advantage of trading using opposite Huabao International and Essentra Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huabao International position performs unexpectedly, Essentra Plc 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 Essentra Plc will offset losses from the drop in Essentra Plc's long position.| Huabao International vs. HEXPOL AB | Huabao International vs. Nitto Denko | Huabao International vs. Sasol | Huabao International vs. Eastman Chemical |
| Essentra Plc vs. LyondellBasell Industries NV | Essentra Plc vs. International Flavors Fragrances | Essentra Plc vs. Cabot | Essentra Plc vs. Westlake Chemical |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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