Correlation Between CHINA HUARONG and NORDIC HALIBUT
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and NORDIC HALIBUT 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 NORDIC HALIBUT 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 NORDIC HALIBUT AS, you can compare the effects of market volatilities on CHINA HUARONG and NORDIC HALIBUT 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 NORDIC HALIBUT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and NORDIC HALIBUT.
Diversification Opportunities for CHINA HUARONG and NORDIC HALIBUT
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and NORDIC is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and NORDIC HALIBUT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORDIC HALIBUT AS 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 NORDIC HALIBUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORDIC HALIBUT AS has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and NORDIC HALIBUT go up and down completely randomly.
Pair Corralation between CHINA HUARONG and NORDIC HALIBUT
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 11.62 times more return on investment than NORDIC HALIBUT. However, CHINA HUARONG is 11.62 times more volatile than NORDIC HALIBUT AS. It trades about 0.08 of its potential returns per unit of risk. NORDIC HALIBUT AS is currently generating about 0.0 per unit of risk. If you would invest 0.35 in CHINA HUARONG ENERHD 50 on September 1, 2024 and sell it today you would lose (0.20) from holding CHINA HUARONG ENERHD 50 or give up 57.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.24% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. NORDIC HALIBUT AS
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| NORDIC HALIBUT AS |
CHINA HUARONG and NORDIC HALIBUT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and NORDIC HALIBUT
The main advantage of trading using opposite CHINA HUARONG and NORDIC HALIBUT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, NORDIC HALIBUT 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 NORDIC HALIBUT will offset losses from the drop in NORDIC HALIBUT's long position.| CHINA HUARONG vs. United Breweries Co | CHINA HUARONG vs. Monster Beverage Corp | CHINA HUARONG vs. LIFEWAY FOODS | CHINA HUARONG vs. National Beverage Corp |
| NORDIC HALIBUT vs. Apple Inc | NORDIC HALIBUT vs. Apple Inc | NORDIC HALIBUT vs. Apple Inc | NORDIC HALIBUT vs. Apple Inc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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