Correlation Between CHINA HUARONG and Office Properties
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Office Properties 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 Office Properties 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 Office Properties Income, you can compare the effects of market volatilities on CHINA HUARONG and Office Properties 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 Office Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Office Properties.
Diversification Opportunities for CHINA HUARONG and Office Properties
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and Office is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Office Properties Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Office Properties Income 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 Office Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Office Properties Income has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Office Properties go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Office Properties
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the Office Properties. In addition to that, CHINA HUARONG is 1.28 times more volatile than Office Properties Income. It trades about -0.03 of its total potential returns per unit of risk. Office Properties Income is currently generating about 0.14 per unit of volatility. If you would invest 104.00 in Office Properties Income on September 12, 2024 and sell it today you would earn a total of 26.00 from holding Office Properties Income or generate 25.0% 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. Office Properties Income
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Office Properties Income |
CHINA HUARONG and Office Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Office Properties
The main advantage of trading using opposite CHINA HUARONG and Office Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Office Properties 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 Office Properties will offset losses from the drop in Office Properties' long position.| CHINA HUARONG vs. Air Transport Services | CHINA HUARONG vs. Liberty Broadband | CHINA HUARONG vs. TEXAS ROADHOUSE | CHINA HUARONG vs. NORWEGIAN AIR SHUT |
| Office Properties vs. CITY OFFICE REIT | Office Properties vs. CREMECOMTRSBI DL 001 | Office Properties vs. Superior Plus Corp | Office Properties vs. SIVERS SEMICONDUCTORS AB |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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