Correlation Between CHINA HUARONG and MOLSON RS
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and MOLSON RS 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 MOLSON RS 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 MOLSON RS BEVERAGE, you can compare the effects of market volatilities on CHINA HUARONG and MOLSON RS 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 MOLSON RS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and MOLSON RS.
Diversification Opportunities for CHINA HUARONG and MOLSON RS
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between CHINA and MOLSON is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and MOLSON RS BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOLSON RS BEVERAGE 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 MOLSON RS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOLSON RS BEVERAGE has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and MOLSON RS go up and down completely randomly.
Pair Corralation between CHINA HUARONG and MOLSON RS
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 16.85 times more return on investment than MOLSON RS. However, CHINA HUARONG is 16.85 times more volatile than MOLSON RS BEVERAGE. It trades about 0.13 of its potential returns per unit of risk. MOLSON RS BEVERAGE is currently generating about 0.01 per unit of risk. If you would invest 0.05 in CHINA HUARONG ENERHD 50 on September 14, 2024 and sell it today you would earn a total of 0.10 from holding CHINA HUARONG ENERHD 50 or generate 200.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. MOLSON RS BEVERAGE
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| MOLSON RS BEVERAGE |
CHINA HUARONG and MOLSON RS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and MOLSON RS
The main advantage of trading using opposite CHINA HUARONG and MOLSON RS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, MOLSON RS 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 MOLSON RS will offset losses from the drop in MOLSON RS'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 |
| MOLSON RS vs. Superior Plus Corp | MOLSON RS vs. SIVERS SEMICONDUCTORS AB | MOLSON RS vs. NorAm Drilling AS | MOLSON RS vs. Norsk Hydro ASA |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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