Correlation Between Packaging and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both Packaging 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 Packaging and CHINA HUARONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Packaging of and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on Packaging 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 Packaging with a short position of CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Packaging and CHINA HUARONG.
Diversification Opportunities for Packaging and CHINA HUARONG
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Packaging and CHINA is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Packaging of 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 Packaging 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 Packaging of 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 Packaging i.e., Packaging and CHINA HUARONG go up and down completely randomly.
Pair Corralation between Packaging and CHINA HUARONG
Assuming the 90 days horizon Packaging is expected to generate 12.92 times less return on investment than CHINA HUARONG. But when comparing it to its historical volatility, Packaging of is 22.8 times less risky than CHINA HUARONG. It trades about 0.25 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.05 in CHINA HUARONG ENERHD 50 on September 12, 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Packaging of vs. CHINA HUARONG ENERHD 50
Performance |
| Timeline |
| Packaging |
| CHINA HUARONG ENERHD |
Packaging and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Packaging and CHINA HUARONG
The main advantage of trading using opposite Packaging and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Packaging 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.| Packaging vs. Graphic Packaging Holding | Packaging vs. Superior Plus Corp | Packaging vs. SIVERS SEMICONDUCTORS AB | Packaging vs. Norsk Hydro ASA |
| CHINA HUARONG vs. WILLIS LEASE FIN | CHINA HUARONG vs. SAFETY MEDICAL PROD | CHINA HUARONG vs. AVITA Medical | CHINA HUARONG vs. CarsalesCom |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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