Correlation Between CHINA HUARONG and Albemarle
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Albemarle 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 Albemarle 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 Albemarle, you can compare the effects of market volatilities on CHINA HUARONG and Albemarle 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 Albemarle. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Albemarle.
Diversification Opportunities for CHINA HUARONG and Albemarle
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CHINA and Albemarle is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle 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 Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Albemarle go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Albemarle
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the Albemarle. In addition to that, CHINA HUARONG is 4.45 times more volatile than Albemarle. It trades about -0.03 of its total potential returns per unit of risk. Albemarle is currently generating about 0.02 per unit of volatility. If you would invest 9,488 in Albemarle on September 16, 2024 and sell it today you would earn a total of 12.00 from holding Albemarle or generate 0.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Albemarle
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Albemarle |
CHINA HUARONG and Albemarle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Albemarle
The main advantage of trading using opposite CHINA HUARONG and Albemarle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Albemarle 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 Albemarle will offset losses from the drop in Albemarle's long position.| CHINA HUARONG vs. Alibaba Group Holding | CHINA HUARONG vs. ConocoPhillips | CHINA HUARONG vs. Superior Plus Corp | CHINA HUARONG vs. Origin Agritech |
| Albemarle vs. United Breweries Co | Albemarle vs. Charter Communications | Albemarle vs. MAROC TELECOM | Albemarle vs. Ribbon Communications |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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