Correlation Between CHINA HUARONG and Covivio SA
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Covivio SA 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 Covivio SA 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 Covivio SA, you can compare the effects of market volatilities on CHINA HUARONG and Covivio SA 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 Covivio SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Covivio SA.
Diversification Opportunities for CHINA HUARONG and Covivio SA
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and Covivio is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Covivio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covivio SA 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 Covivio SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covivio SA has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Covivio SA go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Covivio SA
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the Covivio SA. In addition to that, CHINA HUARONG is 9.59 times more volatile than Covivio SA. It trades about -0.03 of its total potential returns per unit of risk. Covivio SA is currently generating about -0.14 per unit of volatility. If you would invest 5,240 in Covivio SA on September 12, 2024 and sell it today you would lose (244.00) from holding Covivio SA or give up 4.66% 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. Covivio SA
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Covivio SA |
CHINA HUARONG and Covivio SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Covivio SA
The main advantage of trading using opposite CHINA HUARONG and Covivio SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Covivio SA 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 Covivio SA will offset losses from the drop in Covivio SA's long position.| CHINA HUARONG vs. Air Transport Services | CHINA HUARONG vs. Liberty Broadband | CHINA HUARONG vs. TEXAS ROADHOUSE | CHINA HUARONG vs. NORWEGIAN AIR SHUT |
| Covivio SA vs. Superior Plus Corp | Covivio SA vs. SIVERS SEMICONDUCTORS AB | Covivio SA vs. CHINA HUARONG ENERHD 50 | Covivio SA vs. NORDIC HALIBUT AS |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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