Correlation Between CHINA HUARONG and Metro AG
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on CHINA HUARONG and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Metro AG.
Diversification Opportunities for CHINA HUARONG and Metro AG
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and Metro is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Metro AG go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Metro AG
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 12.83 times more return on investment than Metro AG. However, CHINA HUARONG is 12.83 times more volatile than Metro AG. It trades about 0.13 of its potential returns per unit of risk. Metro AG is currently generating about 0.0 per unit of risk. If you would invest 0.35 in CHINA HUARONG ENERHD 50 on September 19, 2024 and sell it today you would lose (0.15) from holding CHINA HUARONG ENERHD 50 or give up 42.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Metro AG
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Metro AG |
CHINA HUARONG and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Metro AG
The main advantage of trading using opposite CHINA HUARONG and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| CHINA HUARONG vs. Suntory Beverage Food | CHINA HUARONG vs. Monster Beverage Corp | CHINA HUARONG vs. Collins Foods Limited | CHINA HUARONG vs. EBRO FOODS |
| Metro AG vs. TYSON FOODS A | Metro AG vs. JJ SNACK FOODS | Metro AG vs. National Beverage Corp | Metro AG vs. Entravision 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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