Correlation Between FLOW TRADERS and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS 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 FLOW TRADERS and CHINA HUARONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on FLOW TRADERS 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 FLOW TRADERS with a short position of CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and CHINA HUARONG.
Diversification Opportunities for FLOW TRADERS and CHINA HUARONG
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FLOW and CHINA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD 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 FLOW TRADERS 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 FLOW TRADERS LTD 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 FLOW TRADERS i.e., FLOW TRADERS and CHINA HUARONG go up and down completely randomly.
Pair Corralation between FLOW TRADERS and CHINA HUARONG
Assuming the 90 days horizon FLOW TRADERS is expected to generate 6.95 times less return on investment than CHINA HUARONG. But when comparing it to its historical volatility, FLOW TRADERS LTD is 13.93 times less risky than CHINA HUARONG. It trades about 0.11 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.20 in CHINA HUARONG ENERHD 50 on November 7, 2024 and sell it today you would lose (0.10) from holding CHINA HUARONG ENERHD 50 or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. CHINA HUARONG ENERHD 50
Performance |
| Timeline |
| FLOW TRADERS LTD |
| CHINA HUARONG ENERHD |
FLOW TRADERS and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and CHINA HUARONG
The main advantage of trading using opposite FLOW TRADERS and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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.| FLOW TRADERS vs. UNIVERSAL MUSIC GROUP | FLOW TRADERS vs. Strategic Education | FLOW TRADERS vs. The Trade Desk | FLOW TRADERS vs. Xinhua Winshare Publishing |
| CHINA HUARONG vs. ARROW ELECTRONICS | CHINA HUARONG vs. Magnachip Semiconductor | CHINA HUARONG vs. Meiko Electronics Co | CHINA HUARONG vs. Tower Semiconductor |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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