Correlation Between CHINA HUARONG and Packaging
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Packaging 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 Packaging 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 Packaging of, you can compare the effects of market volatilities on CHINA HUARONG and Packaging 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 Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Packaging.
Diversification Opportunities for CHINA HUARONG and Packaging
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CHINA and Packaging is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Packaging of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging 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 Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packaging has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Packaging go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Packaging
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the Packaging. In addition to that, CHINA HUARONG is 16.37 times more volatile than Packaging of. It trades about -0.03 of its total potential returns per unit of risk. Packaging of is currently generating about 0.04 per unit of volatility. If you would invest 22,470 in Packaging of on September 13, 2024 and sell it today you would earn a total of 160.00 from holding Packaging of or generate 0.71% return on investment 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. Packaging of
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Packaging |
CHINA HUARONG and Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Packaging
The main advantage of trading using opposite CHINA HUARONG and Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Packaging 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 Packaging will offset losses from the drop in Packaging'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 |
| Packaging vs. ADRIATIC METALS LS 013355 | Packaging vs. Scientific Games | Packaging vs. Evolution Mining Limited | Packaging vs. TSOGO SUN GAMING |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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