Correlation Between CHINA HUARONG and ADRIATIC METALS
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and ADRIATIC METALS 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 ADRIATIC METALS 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 ADRIATIC METALS LS 013355, you can compare the effects of market volatilities on CHINA HUARONG and ADRIATIC METALS 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 ADRIATIC METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and ADRIATIC METALS.
Diversification Opportunities for CHINA HUARONG and ADRIATIC METALS
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and ADRIATIC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and ADRIATIC METALS LS 013355 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADRIATIC METALS LS 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 ADRIATIC METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADRIATIC METALS LS has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and ADRIATIC METALS go up and down completely randomly.
Pair Corralation between CHINA HUARONG and ADRIATIC METALS
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 11.37 times more return on investment than ADRIATIC METALS. However, CHINA HUARONG is 11.37 times more volatile than ADRIATIC METALS LS 013355. It trades about 0.11 of its potential returns per unit of risk. ADRIATIC METALS LS 013355 is currently generating about 0.03 per unit of risk. If you would invest 0.55 in CHINA HUARONG ENERHD 50 on September 14, 2024 and sell it today you would lose (0.40) from holding CHINA HUARONG ENERHD 50 or give up 72.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. ADRIATIC METALS LS 013355
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| ADRIATIC METALS LS |
CHINA HUARONG and ADRIATIC METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and ADRIATIC METALS
The main advantage of trading using opposite CHINA HUARONG and ADRIATIC METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, ADRIATIC METALS 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 ADRIATIC METALS will offset losses from the drop in ADRIATIC METALS's long position.| CHINA HUARONG vs. Scandinavian Tobacco Group | CHINA HUARONG vs. Zoom Video Communications | CHINA HUARONG vs. WillScot Mobile Mini | CHINA HUARONG vs. Zurich Insurance Group |
| ADRIATIC METALS vs. Goodyear Tire Rubber | ADRIATIC METALS vs. Materialise NV | ADRIATIC METALS vs. CN MODERN DAIRY | ADRIATIC METALS vs. Performance Food Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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