Correlation Between CHINA HUARONG and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and FLOW TRADERS 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 FLOW TRADERS 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 FLOW TRADERS LTD, you can compare the effects of market volatilities on CHINA HUARONG and FLOW TRADERS 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 FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and FLOW TRADERS.
Diversification Opportunities for CHINA HUARONG and FLOW TRADERS
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHINA and FLOW is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and FLOW TRADERS go up and down completely randomly.
Pair Corralation between CHINA HUARONG and FLOW TRADERS
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the FLOW TRADERS. In addition to that, CHINA HUARONG is 13.97 times more volatile than FLOW TRADERS LTD. It trades about -0.03 of its total potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.02 per unit of volatility. If you would invest 2,100 in FLOW TRADERS LTD on September 14, 2024 and sell it today you would earn a total of 6.00 from holding FLOW TRADERS LTD or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. FLOW TRADERS LTD
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| FLOW TRADERS LTD |
CHINA HUARONG and FLOW TRADERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and FLOW TRADERS
The main advantage of trading using opposite CHINA HUARONG and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS'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 |
| FLOW TRADERS vs. Superior Plus Corp | FLOW TRADERS vs. SIVERS SEMICONDUCTORS AB | FLOW TRADERS vs. CHINA HUARONG ENERHD 50 | FLOW TRADERS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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