Correlation Between CHINA HUARONG and Richter Gedeon
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Richter Gedeon 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 Richter Gedeon 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 Richter Gedeon Vegyszeti, you can compare the effects of market volatilities on CHINA HUARONG and Richter Gedeon 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 Richter Gedeon. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Richter Gedeon.
Diversification Opportunities for CHINA HUARONG and Richter Gedeon
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and Richter is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Richter Gedeon Vegyszeti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richter Gedeon Vegyszeti 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 Richter Gedeon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richter Gedeon Vegyszeti has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Richter Gedeon go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Richter Gedeon
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the Richter Gedeon. In addition to that, CHINA HUARONG is 9.42 times more volatile than Richter Gedeon Vegyszeti. It trades about -0.03 of its total potential returns per unit of risk. Richter Gedeon Vegyszeti is currently generating about -0.16 per unit of volatility. If you would invest 2,692 in Richter Gedeon Vegyszeti on September 1, 2024 and sell it today you would lose (152.00) from holding Richter Gedeon Vegyszeti or give up 5.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Richter Gedeon Vegyszeti
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Richter Gedeon Vegyszeti |
CHINA HUARONG and Richter Gedeon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Richter Gedeon
The main advantage of trading using opposite CHINA HUARONG and Richter Gedeon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Richter Gedeon 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 Richter Gedeon will offset losses from the drop in Richter Gedeon's long position.| CHINA HUARONG vs. United Breweries Co | CHINA HUARONG vs. Monster Beverage Corp | CHINA HUARONG vs. LIFEWAY FOODS | CHINA HUARONG vs. National Beverage Corp |
| Richter Gedeon vs. Eisai Co | Richter Gedeon vs. Shionogi Co | Richter Gedeon vs. Superior Plus Corp | Richter Gedeon vs. Origin Agritech |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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