Correlation Between Walmart and Hong Yuan
Can any of the company-specific risk be diversified away by investing in both Walmart 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 Walmart and Hong Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Hong Yuan Holding, you can compare the effects of market volatilities on Walmart 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 Walmart with a short position of Hong Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Hong Yuan.
Diversification Opportunities for Walmart and Hong Yuan
Poor diversification
The 3 months correlation between Walmart and Hong is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Walmart 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 Walmart 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 Walmart 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 Walmart i.e., Walmart and Hong Yuan go up and down completely randomly.
Pair Corralation between Walmart and Hong Yuan
Considering the 90-day investment horizon Walmart is expected to generate 10.71 times less return on investment than Hong Yuan. But when comparing it to its historical volatility, Walmart is 29.27 times less risky than Hong Yuan. It trades about 0.53 of its potential returns per unit of risk. 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 Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walmart vs. Hong Yuan Holding
Performance |
| Timeline |
| Walmart |
| Hong Yuan Holding |
Walmart and Hong Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Hong Yuan
The main advantage of trading using opposite Walmart and Hong Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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