Correlation Between QUALCOMM Incorporated and Hua Hong
Can any of the company-specific risk be diversified away by investing in both QUALCOMM Incorporated and Hua Hong 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 QUALCOMM Incorporated and Hua Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QUALCOMM Incorporated and Hua Hong Semiconductor, you can compare the effects of market volatilities on QUALCOMM Incorporated and Hua Hong 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 QUALCOMM Incorporated with a short position of Hua Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of QUALCOMM Incorporated and Hua Hong.
Diversification Opportunities for QUALCOMM Incorporated and Hua Hong
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between QUALCOMM and Hua is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding QUALCOMM Incorporated and Hua Hong Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Hong Semiconductor and QUALCOMM Incorporated 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 QUALCOMM Incorporated are associated (or correlated) with Hua Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Hong Semiconductor has no effect on the direction of QUALCOMM Incorporated i.e., QUALCOMM Incorporated and Hua Hong go up and down completely randomly.
Pair Corralation between QUALCOMM Incorporated and Hua Hong
Assuming the 90 days horizon QUALCOMM Incorporated is expected to generate 1.56 times less return on investment than Hua Hong. But when comparing it to its historical volatility, QUALCOMM Incorporated is 2.13 times less risky than Hua Hong. It trades about 0.28 of its potential returns per unit of risk. Hua Hong Semiconductor is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Hua Hong Semiconductor on November 6, 2024 and sell it today you would earn a total of 30.00 from holding Hua Hong Semiconductor or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
QUALCOMM Incorporated vs. Hua Hong Semiconductor
Performance |
| Timeline |
| QUALCOMM Incorporated |
| Hua Hong Semiconductor |
QUALCOMM Incorporated and Hua Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QUALCOMM Incorporated and Hua Hong
The main advantage of trading using opposite QUALCOMM Incorporated and Hua Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QUALCOMM Incorporated position performs unexpectedly, Hua Hong 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 Hua Hong will offset losses from the drop in Hua Hong's long position.| QUALCOMM Incorporated vs. CHRYSALIS INVESTMENTS LTD | QUALCOMM Incorporated vs. WisdomTree Investments | QUALCOMM Incorporated vs. Gladstone Investment | QUALCOMM Incorporated vs. AOYAMA TRADING |
| Hua Hong vs. US Physical Therapy | Hua Hong vs. Commonwealth Bank of | Hua Hong vs. Virtu Financial | Hua Hong vs. CeoTronics AG |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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