Correlation Between CHINA HUARONG and Dis Fastigheter
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Dis Fastigheter 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 Dis Fastigheter 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 Dis Fastigheter AB, you can compare the effects of market volatilities on CHINA HUARONG and Dis Fastigheter 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 Dis Fastigheter. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Dis Fastigheter.
Diversification Opportunities for CHINA HUARONG and Dis Fastigheter
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and Dis is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Dis Fastigheter AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dis Fastigheter AB 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 Dis Fastigheter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dis Fastigheter AB has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Dis Fastigheter go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Dis Fastigheter
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 16.1 times more return on investment than Dis Fastigheter. However, CHINA HUARONG is 16.1 times more volatile than Dis Fastigheter AB. It trades about 0.11 of its potential returns per unit of risk. Dis Fastigheter AB is currently generating about 0.05 per unit of risk. If you would invest 0.55 in CHINA HUARONG ENERHD 50 on September 13, 2024 and sell it today you would lose (0.40) from holding CHINA HUARONG ENERHD 50 or give up 72.73% 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. Dis Fastigheter AB
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Dis Fastigheter AB |
CHINA HUARONG and Dis Fastigheter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Dis Fastigheter
The main advantage of trading using opposite CHINA HUARONG and Dis Fastigheter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Dis Fastigheter 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 Dis Fastigheter will offset losses from the drop in Dis Fastigheter's long position.| CHINA HUARONG vs. WILLIS LEASE FIN | CHINA HUARONG vs. SAFETY MEDICAL PROD | CHINA HUARONG vs. AVITA Medical | CHINA HUARONG vs. CarsalesCom |
| Dis Fastigheter vs. OPEN HOUSE GROUP | Dis Fastigheter vs. Superior Plus Corp | Dis Fastigheter vs. SIVERS SEMICONDUCTORS AB | Dis Fastigheter 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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