Correlation Between CHINA HUARONG and RYOHIN UNSPADR1
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and RYOHIN UNSPADR1 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 RYOHIN UNSPADR1 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 RYOHIN UNSPADR1, you can compare the effects of market volatilities on CHINA HUARONG and RYOHIN UNSPADR1 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 RYOHIN UNSPADR1. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and RYOHIN UNSPADR1.
Diversification Opportunities for CHINA HUARONG and RYOHIN UNSPADR1
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and RYOHIN is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and RYOHIN UNSPADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RYOHIN UNSPADR1 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 RYOHIN UNSPADR1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RYOHIN UNSPADR1 has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and RYOHIN UNSPADR1 go up and down completely randomly.
Pair Corralation between CHINA HUARONG and RYOHIN UNSPADR1
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the RYOHIN UNSPADR1. In addition to that, CHINA HUARONG is 2.73 times more volatile than RYOHIN UNSPADR1. It trades about -0.21 of its total potential returns per unit of risk. RYOHIN UNSPADR1 is currently generating about 0.6 per unit of volatility. If you would invest 1,400 in RYOHIN UNSPADR1 on August 24, 2024 and sell it today you would earn a total of 400.00 from holding RYOHIN UNSPADR1 or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. RYOHIN UNSPADR1
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| RYOHIN UNSPADR1 |
CHINA HUARONG and RYOHIN UNSPADR1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and RYOHIN UNSPADR1
The main advantage of trading using opposite CHINA HUARONG and RYOHIN UNSPADR1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, RYOHIN UNSPADR1 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 RYOHIN UNSPADR1 will offset losses from the drop in RYOHIN UNSPADR1's long position.| CHINA HUARONG vs. PennantPark Investment | CHINA HUARONG vs. REGAL ASIAN INVESTMENTS | CHINA HUARONG vs. MGIC INVESTMENT | CHINA HUARONG vs. ALERION CLEANPOWER |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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