Correlation Between CHINA HUARONG and NEW PACIFIC
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and NEW PACIFIC 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 NEW PACIFIC 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 NEW PACIFIC METALS, you can compare the effects of market volatilities on CHINA HUARONG and NEW PACIFIC 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 NEW PACIFIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and NEW PACIFIC.
Diversification Opportunities for CHINA HUARONG and NEW PACIFIC
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and NEW is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and NEW PACIFIC METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW PACIFIC METALS 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 NEW PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW PACIFIC METALS has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and NEW PACIFIC go up and down completely randomly.
Pair Corralation between CHINA HUARONG and NEW PACIFIC
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the NEW PACIFIC. In addition to that, CHINA HUARONG is 4.9 times more volatile than NEW PACIFIC METALS. It trades about -0.03 of its total potential returns per unit of risk. NEW PACIFIC METALS is currently generating about 0.11 per unit of volatility. If you would invest 133.00 in NEW PACIFIC METALS on September 14, 2024 and sell it today you would earn a total of 8.00 from holding NEW PACIFIC METALS or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. NEW PACIFIC METALS
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| NEW PACIFIC METALS |
CHINA HUARONG and NEW PACIFIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and NEW PACIFIC
The main advantage of trading using opposite CHINA HUARONG and NEW PACIFIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, NEW PACIFIC 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 NEW PACIFIC will offset losses from the drop in NEW PACIFIC'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 |
| NEW PACIFIC vs. Superior Plus Corp | NEW PACIFIC vs. SIVERS SEMICONDUCTORS AB | NEW PACIFIC vs. Norsk Hydro ASA | NEW PACIFIC vs. Reliance Steel Aluminum |
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 Stocks Directory module to find actively traded stocks across global markets.
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