Correlation Between CHINA HUARONG and POSBO UNSPADRS20YC1
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and POSBO UNSPADRS20YC1 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 POSBO UNSPADRS20YC1 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 POSBO UNSPADRS20YC1, you can compare the effects of market volatilities on CHINA HUARONG and POSBO UNSPADRS20YC1 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 POSBO UNSPADRS20YC1. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and POSBO UNSPADRS20YC1.
Diversification Opportunities for CHINA HUARONG and POSBO UNSPADRS20YC1
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHINA and POSBO is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and POSBO UNSPADRS20YC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSBO UNSPADRS20YC1 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 POSBO UNSPADRS20YC1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSBO UNSPADRS20YC1 has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and POSBO UNSPADRS20YC1 go up and down completely randomly.
Pair Corralation between CHINA HUARONG and POSBO UNSPADRS20YC1
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the POSBO UNSPADRS20YC1. In addition to that, CHINA HUARONG is 10.68 times more volatile than POSBO UNSPADRS20YC1. It trades about -0.03 of its total potential returns per unit of risk. POSBO UNSPADRS20YC1 is currently generating about 0.04 per unit of volatility. If you would invest 1,030 in POSBO UNSPADRS20YC1 on September 14, 2024 and sell it today you would earn a total of 10.00 from holding POSBO UNSPADRS20YC1 or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. POSBO UNSPADRS20YC1
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| POSBO UNSPADRS20YC1 |
CHINA HUARONG and POSBO UNSPADRS20YC1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and POSBO UNSPADRS20YC1
The main advantage of trading using opposite CHINA HUARONG and POSBO UNSPADRS20YC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, POSBO UNSPADRS20YC1 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 POSBO UNSPADRS20YC1 will offset losses from the drop in POSBO UNSPADRS20YC1'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 |
| POSBO UNSPADRS20YC1 vs. Postal Savings Bank | POSBO UNSPADRS20YC1 vs. UTD OV BK LOC ADR1 | POSBO UNSPADRS20YC1 vs. Superior Plus Corp | POSBO UNSPADRS20YC1 vs. SIVERS SEMICONDUCTORS AB |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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