Correlation Between VULCAN MATERIALS and Hua Hong
Can any of the company-specific risk be diversified away by investing in both VULCAN MATERIALS 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 VULCAN MATERIALS and Hua Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VULCAN MATERIALS and Hua Hong Semiconductor, you can compare the effects of market volatilities on VULCAN MATERIALS 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 VULCAN MATERIALS with a short position of Hua Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and Hua Hong.
Diversification Opportunities for VULCAN MATERIALS and Hua Hong
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between VULCAN and Hua is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS i.e., VULCAN MATERIALS and Hua Hong go up and down completely randomly.
Pair Corralation between VULCAN MATERIALS and Hua Hong
Assuming the 90 days trading horizon VULCAN MATERIALS is expected to generate 0.43 times more return on investment than Hua Hong. However, VULCAN MATERIALS is 2.35 times less risky than Hua Hong. It trades about 0.06 of its potential returns per unit of risk. Hua Hong Semiconductor is currently generating about 0.01 per unit of risk. If you would invest 16,658 in VULCAN MATERIALS on October 25, 2024 and sell it today you would earn a total of 9,542 from holding VULCAN MATERIALS or generate 57.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VULCAN MATERIALS vs. Hua Hong Semiconductor
Performance |
| Timeline |
| VULCAN MATERIALS |
| Hua Hong Semiconductor |
VULCAN MATERIALS and Hua Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VULCAN MATERIALS and Hua Hong
The main advantage of trading using opposite VULCAN MATERIALS and Hua Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VULCAN MATERIALS 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.| VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc |
| Hua Hong vs. Discover Financial Services | Hua Hong vs. COPLAND ROAD CAPITAL | Hua Hong vs. BANK OF CHINA | Hua Hong vs. Chiba Bank |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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