Correlation Between CHINA HUARONG and CHARLES SCHWAB
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and CHARLES SCHWAB 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 CHARLES SCHWAB 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 CHARLES SCHWAB DEPPRFJ, you can compare the effects of market volatilities on CHINA HUARONG and CHARLES SCHWAB 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 CHARLES SCHWAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and CHARLES SCHWAB.
Diversification Opportunities for CHINA HUARONG and CHARLES SCHWAB
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and CHARLES is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and CHARLES SCHWAB DEPPRFJ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHARLES SCHWAB DEPPRFJ 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 CHARLES SCHWAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHARLES SCHWAB DEPPRFJ has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and CHARLES SCHWAB go up and down completely randomly.
Pair Corralation between CHINA HUARONG and CHARLES SCHWAB
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 17.77 times more return on investment than CHARLES SCHWAB. However, CHINA HUARONG is 17.77 times more volatile than CHARLES SCHWAB DEPPRFJ. It trades about 0.13 of its potential returns per unit of risk. CHARLES SCHWAB DEPPRFJ is currently generating about 0.03 per unit of risk. If you would invest 0.05 in CHINA HUARONG ENERHD 50 on September 12, 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 Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. CHARLES SCHWAB DEPPRFJ
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| CHARLES SCHWAB DEPPRFJ |
CHINA HUARONG and CHARLES SCHWAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and CHARLES SCHWAB
The main advantage of trading using opposite CHINA HUARONG and CHARLES SCHWAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, CHARLES SCHWAB 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 CHARLES SCHWAB will offset losses from the drop in CHARLES SCHWAB's long position.| CHINA HUARONG vs. Air Transport Services | CHINA HUARONG vs. Liberty Broadband | CHINA HUARONG vs. TEXAS ROADHOUSE | CHINA HUARONG vs. NORWEGIAN AIR SHUT |
| CHARLES SCHWAB vs. Superior Plus Corp | CHARLES SCHWAB vs. SIVERS SEMICONDUCTORS AB | CHARLES SCHWAB vs. CHINA HUARONG ENERHD 50 | CHARLES SCHWAB 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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