Correlation Between CHINA HUARONG and American International
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and American International 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 American International 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 American International Group, you can compare the effects of market volatilities on CHINA HUARONG and American International 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 American International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and American International.
Diversification Opportunities for CHINA HUARONG and American International
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and American is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and American International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American International 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 American International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American International has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and American International go up and down completely randomly.
Pair Corralation between CHINA HUARONG and American International
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the American International. In addition to that, CHINA HUARONG is 12.24 times more volatile than American International Group. It trades about -0.03 of its total potential returns per unit of risk. American International Group is currently generating about -0.07 per unit of volatility. If you would invest 7,130 in American International Group on September 12, 2024 and sell it today you would lose (141.00) from holding American International Group or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. American International Group
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| American International |
CHINA HUARONG and American International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and American International
The main advantage of trading using opposite CHINA HUARONG and American International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, American International 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 American International will offset losses from the drop in American International's long position.| CHINA HUARONG vs. Air Transport Services | CHINA HUARONG vs. Liberty Broadband | CHINA HUARONG vs. TEXAS ROADHOUSE | CHINA HUARONG vs. NORWEGIAN AIR SHUT |
| American International vs. Zurich Insurance Group | American International vs. Superior Plus Corp | American International vs. SIVERS SEMICONDUCTORS AB | American International vs. CHINA HUARONG ENERHD 50 |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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