Correlation Between CHINA HUARONG and Markel
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Markel 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 Markel 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 Markel, you can compare the effects of market volatilities on CHINA HUARONG and Markel 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 Markel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Markel.
Diversification Opportunities for CHINA HUARONG and Markel
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between CHINA and Markel is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel 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 Markel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Markel go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Markel
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 24.39 times more return on investment than Markel. However, CHINA HUARONG is 24.39 times more volatile than Markel. It trades about 0.11 of its potential returns per unit of risk. Markel is currently generating about 0.05 per unit of risk. If you would invest 0.55 in CHINA HUARONG ENERHD 50 on September 14, 2024 and sell it today you would lose (0.40) from holding CHINA HUARONG ENERHD 50 or give up 72.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Markel
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Markel |
CHINA HUARONG and Markel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Markel
The main advantage of trading using opposite CHINA HUARONG and Markel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Markel 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 Markel will offset losses from the drop in Markel's long position.| CHINA HUARONG vs. Scandinavian Tobacco Group | CHINA HUARONG vs. Zoom Video Communications | CHINA HUARONG vs. WillScot Mobile Mini | CHINA HUARONG vs. Zurich Insurance Group |
| Markel vs. Datadog | Markel vs. Brockhaus Capital Management | Markel vs. Hyrican Informationssysteme Aktiengesellschaft | Markel vs. CEOTRONICS |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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