Correlation Between CHINA HUARONG and Bridgestone
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Bridgestone 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 Bridgestone 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 Bridgestone, you can compare the effects of market volatilities on CHINA HUARONG and Bridgestone 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 Bridgestone. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Bridgestone.
Diversification Opportunities for CHINA HUARONG and Bridgestone
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and Bridgestone is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Bridgestone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgestone 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 Bridgestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgestone has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Bridgestone go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Bridgestone
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the Bridgestone. In addition to that, CHINA HUARONG is 16.5 times more volatile than Bridgestone. It trades about -0.03 of its total potential returns per unit of risk. Bridgestone is currently generating about 0.0 per unit of volatility. If you would invest 1,600 in Bridgestone on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Bridgestone 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. Bridgestone
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Bridgestone |
CHINA HUARONG and Bridgestone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Bridgestone
The main advantage of trading using opposite CHINA HUARONG and Bridgestone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Bridgestone 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 Bridgestone will offset losses from the drop in Bridgestone's long position.| CHINA HUARONG vs. Scandinavian Tobacco Group | CHINA HUARONG vs. Zoom Video Communications | CHINA HUARONG vs. WillScot Mobile Mini | CHINA HUARONG vs. Zurich Insurance Group |
| Bridgestone vs. Highlight Communications AG | Bridgestone vs. Tower One Wireless | Bridgestone vs. NEWELL RUBBERMAID | Bridgestone vs. Consolidated Communications Holdings |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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