Correlation Between CHINA HUARONG and Churchill Downs
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Churchill Downs 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 Churchill Downs 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 Churchill Downs Incorporated, you can compare the effects of market volatilities on CHINA HUARONG and Churchill Downs 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 Churchill Downs. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Churchill Downs.
Diversification Opportunities for CHINA HUARONG and Churchill Downs
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CHINA and Churchill is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Churchill Downs Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Downs 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 Churchill Downs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Churchill Downs has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Churchill Downs go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Churchill Downs
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 21.3 times more return on investment than Churchill Downs. However, CHINA HUARONG is 21.3 times more volatile than Churchill Downs Incorporated. It trades about 0.11 of its potential returns per unit of risk. Churchill Downs Incorporated is currently generating about 0.03 per unit of risk. If you would invest 0.45 in CHINA HUARONG ENERHD 50 on September 3, 2024 and sell it today you would lose (0.30) from holding CHINA HUARONG ENERHD 50 or give up 66.67% of portfolio value 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. Churchill Downs Incorporated
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Churchill Downs |
CHINA HUARONG and Churchill Downs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Churchill Downs
The main advantage of trading using opposite CHINA HUARONG and Churchill Downs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Churchill Downs 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 Churchill Downs will offset losses from the drop in Churchill Downs' long position.| CHINA HUARONG vs. Waste Management | CHINA HUARONG vs. National Health Investors | CHINA HUARONG vs. Apollo Investment Corp | CHINA HUARONG vs. FEMALE HEALTH |
| Churchill Downs vs. Lion One Metals | Churchill Downs vs. Eastman Chemical | Churchill Downs vs. FIREWEED METALS P | Churchill Downs vs. China BlueChemical |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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