Correlation Between Hydratec Industries and IShares China
Can any of the company-specific risk be diversified away by investing in both Hydratec Industries and IShares China 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 Hydratec Industries and IShares China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hydratec Industries NV and iShares China CNY, you can compare the effects of market volatilities on Hydratec Industries and IShares China 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 Hydratec Industries with a short position of IShares China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydratec Industries and IShares China.
Diversification Opportunities for Hydratec Industries and IShares China
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hydratec and IShares is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hydratec Industries NV and iShares China CNY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China CNY and Hydratec Industries 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 Hydratec Industries NV are associated (or correlated) with IShares China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China CNY has no effect on the direction of Hydratec Industries i.e., Hydratec Industries and IShares China go up and down completely randomly.
Pair Corralation between Hydratec Industries and IShares China
Assuming the 90 days trading horizon Hydratec Industries NV is expected to generate 1.61 times more return on investment than IShares China. However, Hydratec Industries is 1.61 times more volatile than iShares China CNY. It trades about 0.22 of its potential returns per unit of risk. iShares China CNY is currently generating about -0.18 per unit of risk. If you would invest 15,600 in Hydratec Industries NV on September 4, 2024 and sell it today you would earn a total of 400.00 from holding Hydratec Industries NV or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hydratec Industries NV vs. iShares China CNY
Performance |
| Timeline |
| Hydratec Industries |
| iShares China CNY |
Hydratec Industries and IShares China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydratec Industries and IShares China
The main advantage of trading using opposite Hydratec Industries and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydratec Industries position performs unexpectedly, IShares China 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 IShares China will offset losses from the drop in IShares China's long position.| Hydratec Industries vs. Wolters Kluwer NV | Hydratec Industries vs. Aalberts Industries NV | Hydratec Industries vs. ASM International NV | Hydratec Industries vs. ASR Nederland NV |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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