Correlation Between Leggett Platt and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both Leggett Platt and CHINA HUARONG 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 Leggett Platt and CHINA HUARONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leggett Platt Incorporated and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on Leggett Platt and CHINA HUARONG 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 Leggett Platt with a short position of CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggett Platt and CHINA HUARONG.
Diversification Opportunities for Leggett Platt and CHINA HUARONG
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leggett and CHINA is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Leggett Platt Incorporated and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD and Leggett Platt 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 Leggett Platt Incorporated are associated (or correlated) with CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of Leggett Platt i.e., Leggett Platt and CHINA HUARONG go up and down completely randomly.
Pair Corralation between Leggett Platt and CHINA HUARONG
Assuming the 90 days horizon Leggett Platt Incorporated is expected to under-perform the CHINA HUARONG. But the stock apears to be less risky and, when comparing its historical volatility, Leggett Platt Incorporated is 11.52 times less risky than CHINA HUARONG. The stock trades about -0.05 of its potential returns per unit of risk. The CHINA HUARONG ENERHD 50 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.05 in CHINA HUARONG ENERHD 50 on September 15, 2024 and sell it today you would earn a total of 0.10 from holding CHINA HUARONG ENERHD 50 or generate 200.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leggett Platt Incorporated vs. CHINA HUARONG ENERHD 50
Performance |
| Timeline |
| Leggett Platt |
| CHINA HUARONG ENERHD |
Leggett Platt and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggett Platt and CHINA HUARONG
The main advantage of trading using opposite Leggett Platt and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggett Platt position performs unexpectedly, CHINA HUARONG 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 HUARONG will offset losses from the drop in CHINA HUARONG's long position.| Leggett Platt vs. Superior Plus Corp | Leggett Platt vs. SIVERS SEMICONDUCTORS AB | Leggett Platt vs. NorAm Drilling AS | Leggett Platt vs. Norsk Hydro ASA |
| CHINA HUARONG vs. Alibaba Group Holding | CHINA HUARONG vs. ConocoPhillips | CHINA HUARONG vs. Superior Plus Corp | CHINA HUARONG vs. Origin Agritech |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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