Correlation Between CHINA HUARONG and Virtus Investment
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Virtus Investment 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 Virtus Investment 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 Virtus Investment Partners, you can compare the effects of market volatilities on CHINA HUARONG and Virtus Investment 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 Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Virtus Investment.
Diversification Opportunities for CHINA HUARONG and Virtus Investment
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and Virtus is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Virtus Investment go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Virtus Investment
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 6.18 times more return on investment than Virtus Investment. However, CHINA HUARONG is 6.18 times more volatile than Virtus Investment Partners. It trades about 0.05 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about -0.3 per unit of risk. If you would invest 0.15 in CHINA HUARONG ENERHD 50 on October 1, 2024 and sell it today you would earn a total of 0.00 from holding CHINA HUARONG ENERHD 50 or generate 0.0% 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. Virtus Investment Partners
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Virtus Investment |
CHINA HUARONG and Virtus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Virtus Investment
The main advantage of trading using opposite CHINA HUARONG and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Virtus Investment 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 Virtus Investment will offset losses from the drop in Virtus Investment's long position.| CHINA HUARONG vs. Alibaba Group Holding | CHINA HUARONG vs. ConocoPhillips | CHINA HUARONG vs. CNOOC | CHINA HUARONG vs. Occidental Petroleum |
| Virtus Investment vs. Sunstone Hotel Investors | Virtus Investment vs. Hyatt Hotels | Virtus Investment vs. Clean Energy Fuels | Virtus Investment vs. ScanSource |
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 CEOs Directory module to screen CEOs from public companies around the world.
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