Correlation Between CHINA HUARONG and Lenox Pasifik
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Lenox Pasifik 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 Lenox Pasifik 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 Lenox Pasifik Investama, you can compare the effects of market volatilities on CHINA HUARONG and Lenox Pasifik 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 Lenox Pasifik. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Lenox Pasifik.
Diversification Opportunities for CHINA HUARONG and Lenox Pasifik
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CHINA and Lenox is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Lenox Pasifik Investama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenox Pasifik Investama 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 Lenox Pasifik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenox Pasifik Investama has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Lenox Pasifik go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Lenox Pasifik
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 1.14 times more return on investment than Lenox Pasifik. However, CHINA HUARONG is 1.14 times more volatile than Lenox Pasifik Investama. It trades about 0.11 of its potential returns per unit of risk. Lenox Pasifik Investama is currently generating about 0.07 per unit of risk. If you would invest 0.55 in CHINA HUARONG ENERHD 50 on September 19, 2024 and sell it today you would lose (0.35) from holding CHINA HUARONG ENERHD 50 or give up 63.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Lenox Pasifik Investama
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Lenox Pasifik Investama |
CHINA HUARONG and Lenox Pasifik Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Lenox Pasifik
The main advantage of trading using opposite CHINA HUARONG and Lenox Pasifik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Lenox Pasifik 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 Lenox Pasifik will offset losses from the drop in Lenox Pasifik's long position.| CHINA HUARONG vs. Suntory Beverage Food | CHINA HUARONG vs. Monster Beverage Corp | CHINA HUARONG vs. Collins Foods Limited | CHINA HUARONG vs. EBRO FOODS |
| Lenox Pasifik vs. Superior Plus Corp | Lenox Pasifik vs. SIVERS SEMICONDUCTORS AB | Lenox Pasifik vs. CHINA HUARONG ENERHD 50 | Lenox Pasifik 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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