Correlation Between CHINA HUARONG and Sabre Insurance
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Sabre Insurance 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 CHINA HUARONG and Sabre Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA HUARONG ENERHD 50 and Sabre Insurance Group, you can compare the effects of market volatilities on CHINA HUARONG and Sabre Insurance 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 CHINA HUARONG with a short position of Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Sabre Insurance.
Diversification Opportunities for CHINA HUARONG and Sabre Insurance
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and Sabre is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group and CHINA HUARONG 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 CHINA HUARONG ENERHD 50 are associated (or correlated) with Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Sabre Insurance go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Sabre Insurance
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 20.34 times more return on investment than Sabre Insurance. However, CHINA HUARONG is 20.34 times more volatile than Sabre Insurance Group. It trades about 0.13 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.03 per unit of risk. If you would invest 0.30 in CHINA HUARONG ENERHD 50 on September 12, 2024 and sell it today you would lose (0.15) from holding CHINA HUARONG ENERHD 50 or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Sabre Insurance Group
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Sabre Insurance Group |
CHINA HUARONG and Sabre Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Sabre Insurance
The main advantage of trading using opposite CHINA HUARONG and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Sabre Insurance 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 Sabre Insurance will offset losses from the drop in Sabre Insurance's long position.| CHINA HUARONG vs. Air Transport Services | CHINA HUARONG vs. Liberty Broadband | CHINA HUARONG vs. TEXAS ROADHOUSE | CHINA HUARONG vs. NORWEGIAN AIR SHUT |
| Sabre Insurance vs. Superior Plus Corp | Sabre Insurance vs. SIVERS SEMICONDUCTORS AB | Sabre Insurance vs. CHINA HUARONG ENERHD 50 | Sabre Insurance vs. NORDIC HALIBUT AS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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