Correlation Between CHINA HUARONG and Global Ship
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Global Ship 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 Global Ship 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 Global Ship Lease, you can compare the effects of market volatilities on CHINA HUARONG and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Global Ship.
Diversification Opportunities for CHINA HUARONG and Global Ship
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CHINA and Global is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Global Ship go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Global Ship
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 26.26 times more return on investment than Global Ship. However, CHINA HUARONG is 26.26 times more volatile than Global Ship Lease. It trades about 0.13 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.05 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Global Ship Lease
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Global Ship Lease |
CHINA HUARONG and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Global Ship
The main advantage of trading using opposite CHINA HUARONG and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship'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 |
| Global Ship vs. Superior Plus Corp | Global Ship vs. SIVERS SEMICONDUCTORS AB | Global Ship vs. CHINA HUARONG ENERHD 50 | Global Ship 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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