Correlation Between CHINA HUARONG and Tradegate
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Tradegate 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 Tradegate 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 Tradegate AG Wertpapierhandelsbank, you can compare the effects of market volatilities on CHINA HUARONG and Tradegate 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 Tradegate. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Tradegate.
Diversification Opportunities for CHINA HUARONG and Tradegate
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and Tradegate is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Tradegate AG Wertpapierhandels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradegate AG Wertpap 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 Tradegate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradegate AG Wertpap has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Tradegate go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Tradegate
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the Tradegate. In addition to that, CHINA HUARONG is 35.41 times more volatile than Tradegate AG Wertpapierhandelsbank. It trades about -0.03 of its total potential returns per unit of risk. Tradegate AG Wertpapierhandelsbank is currently generating about -0.19 per unit of volatility. If you would invest 8,850 in Tradegate AG Wertpapierhandelsbank on September 13, 2024 and sell it today you would lose (150.00) from holding Tradegate AG Wertpapierhandelsbank or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. Tradegate AG Wertpapierhandels
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Tradegate AG Wertpap |
CHINA HUARONG and Tradegate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Tradegate
The main advantage of trading using opposite CHINA HUARONG and Tradegate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Tradegate 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 Tradegate will offset losses from the drop in Tradegate's long position.| CHINA HUARONG vs. WILLIS LEASE FIN | CHINA HUARONG vs. SAFETY MEDICAL PROD | CHINA HUARONG vs. AVITA Medical | CHINA HUARONG vs. CarsalesCom |
| Tradegate vs. Superior Plus Corp | Tradegate vs. SIVERS SEMICONDUCTORS AB | Tradegate vs. CHINA HUARONG ENERHD 50 | Tradegate 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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