Correlation Between Volkswagen and Hong Yuan
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Hong Yuan 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 Volkswagen and Hong Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG Pref and Hong Yuan Holding, you can compare the effects of market volatilities on Volkswagen and Hong Yuan 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 Volkswagen with a short position of Hong Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Hong Yuan.
Diversification Opportunities for Volkswagen and Hong Yuan
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and Hong is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Pref and Hong Yuan Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Yuan Holding and Volkswagen 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 Volkswagen AG Pref are associated (or correlated) with Hong Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Yuan Holding has no effect on the direction of Volkswagen i.e., Volkswagen and Hong Yuan go up and down completely randomly.
Pair Corralation between Volkswagen and Hong Yuan
Assuming the 90 days horizon Volkswagen AG Pref is expected to under-perform the Hong Yuan. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG Pref is 16.73 times less risky than Hong Yuan. The pink sheet trades about -0.28 of its potential returns per unit of risk. The Hong Yuan Holding is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Hong Yuan Holding on September 2, 2024 and sell it today you would earn a total of 2.00 from holding Hong Yuan Holding or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Volkswagen AG Pref vs. Hong Yuan Holding
Performance |
| Timeline |
| Volkswagen AG Pref |
| Hong Yuan Holding |
Volkswagen and Hong Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Hong Yuan
The main advantage of trading using opposite Volkswagen and Hong Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Hong Yuan 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 Hong Yuan will offset losses from the drop in Hong Yuan's long position.| Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Porsche Automobil Holding | Volkswagen vs. Ferrari NV | Volkswagen vs. Bayerische Motoren Werke |
| Hong Yuan vs. American Leisure Holdings | Hong Yuan vs. Supurva Healthcare Group | Hong Yuan vs. China Health Management | Hong Yuan vs. Embrace Change Acquisition |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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