Correlation Between CHINA HUARONG and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Procter Gamble 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 Procter Gamble 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 The Procter Gamble, you can compare the effects of market volatilities on CHINA HUARONG and Procter Gamble 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 Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Procter Gamble.
Diversification Opportunities for CHINA HUARONG and Procter Gamble
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and Procter is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Procter Gamble go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Procter Gamble
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the Procter Gamble. In addition to that, CHINA HUARONG is 13.69 times more volatile than The Procter Gamble. It trades about -0.12 of its total potential returns per unit of risk. The Procter Gamble is currently generating about 0.36 per unit of volatility. If you would invest 15,498 in The Procter Gamble on August 30, 2024 and sell it today you would earn a total of 1,506 from holding The Procter Gamble or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. The Procter Gamble
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Procter Gamble |
CHINA HUARONG and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Procter Gamble
The main advantage of trading using opposite CHINA HUARONG and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.| CHINA HUARONG vs. Alibaba Group Holding | CHINA HUARONG vs. WOODSIDE ENE SPADR | CHINA HUARONG vs. Woodside Energy Group |
| Procter Gamble vs. Verizon Communications | Procter Gamble vs. Lamar Advertising | Procter Gamble vs. Hemisphere Energy Corp | Procter Gamble vs. COMPUTERSHARE |
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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