Correlation Between CHINA HUARONG and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Hormel Foods 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 Hormel Foods 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 Hormel Foods, you can compare the effects of market volatilities on CHINA HUARONG and Hormel Foods 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 Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Hormel Foods.
Diversification Opportunities for CHINA HUARONG and Hormel Foods
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and Hormel is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods 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 Hormel Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hormel Foods has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Hormel Foods go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Hormel Foods
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 27.8 times more return on investment than Hormel Foods. However, CHINA HUARONG is 27.8 times more volatile than Hormel Foods. It trades about 0.14 of its potential returns per unit of risk. Hormel Foods is currently generating about -0.01 per unit of risk. If you would invest 0.10 in CHINA HUARONG ENERHD 50 on September 12, 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 | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Hormel Foods
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Hormel Foods |
CHINA HUARONG and Hormel Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Hormel Foods
The main advantage of trading using opposite CHINA HUARONG and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Hormel Foods 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 Hormel Foods will offset losses from the drop in Hormel Foods' long position.| CHINA HUARONG vs. Air Transport Services | CHINA HUARONG vs. Liberty Broadband | CHINA HUARONG vs. TEXAS ROADHOUSE | CHINA HUARONG vs. NORWEGIAN AIR SHUT |
| Hormel Foods vs. Shenandoah Telecommunications | Hormel Foods vs. Iridium Communications | Hormel Foods vs. Ribbon Communications | Hormel Foods vs. Citic Telecom International |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |