Correlation Between CHINA HUARONG and AIB Group
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and AIB Group 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 AIB Group 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 AIB Group plc, you can compare the effects of market volatilities on CHINA HUARONG and AIB Group 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 AIB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and AIB Group.
Diversification Opportunities for CHINA HUARONG and AIB Group
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and AIB is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and AIB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Group plc 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 AIB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Group plc has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and AIB Group go up and down completely randomly.
Pair Corralation between CHINA HUARONG and AIB Group
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 15.36 times more return on investment than AIB Group. However, CHINA HUARONG is 15.36 times more volatile than AIB Group plc. It trades about 0.07 of its potential returns per unit of risk. AIB Group plc is currently generating about -0.1 per unit of risk. If you would invest 0.15 in CHINA HUARONG ENERHD 50 on September 22, 2024 and sell it today you would earn a total of 0.00 from holding CHINA HUARONG ENERHD 50 or generate 0.0% 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. AIB Group plc
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| AIB Group plc |
CHINA HUARONG and AIB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and AIB Group
The main advantage of trading using opposite CHINA HUARONG and AIB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, AIB Group 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 AIB Group will offset losses from the drop in AIB Group's long position.| CHINA HUARONG vs. Evolution Mining Limited | CHINA HUARONG vs. NAKED WINES PLC | CHINA HUARONG vs. Coeur Mining | CHINA HUARONG vs. PLAYSTUDIOS A DL 0001 |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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