Correlation Between CHINA HUARONG and Gol Intelligent
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Gol Intelligent 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 Gol Intelligent 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 Gol Intelligent Airlines, you can compare the effects of market volatilities on CHINA HUARONG and Gol Intelligent 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 Gol Intelligent. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Gol Intelligent.
Diversification Opportunities for CHINA HUARONG and Gol Intelligent
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and Gol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Gol Intelligent Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gol Intelligent Airlines 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 Gol Intelligent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gol Intelligent Airlines has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Gol Intelligent go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Gol Intelligent
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 4.07 times more return on investment than Gol Intelligent. However, CHINA HUARONG is 4.07 times more volatile than Gol Intelligent Airlines. It trades about 0.12 of its potential returns per unit of risk. Gol Intelligent Airlines is currently generating about -0.02 per unit of risk. If you would invest 0.10 in CHINA HUARONG ENERHD 50 on September 4, 2024 and sell it today you would earn a total of 0.05 from holding CHINA HUARONG ENERHD 50 or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Gol Intelligent Airlines
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Gol Intelligent Airlines |
CHINA HUARONG and Gol Intelligent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Gol Intelligent
The main advantage of trading using opposite CHINA HUARONG and Gol Intelligent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Gol Intelligent 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 Gol Intelligent will offset losses from the drop in Gol Intelligent's long position.| CHINA HUARONG vs. Gol Intelligent Airlines | CHINA HUARONG vs. Nippon Steel | CHINA HUARONG vs. ADRIATIC METALS LS 013355 | CHINA HUARONG vs. American Airlines Group |
| Gol Intelligent vs. Apple Inc | Gol Intelligent vs. Apple Inc | Gol Intelligent vs. Apple Inc | Gol Intelligent vs. Apple Inc |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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