Correlation Between CHINA HUARONG and CREMECOMTRSBI
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and CREMECOMTRSBI 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 CREMECOMTRSBI 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 CREMECOMTRSBI DL 001, you can compare the effects of market volatilities on CHINA HUARONG and CREMECOMTRSBI 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 CREMECOMTRSBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and CREMECOMTRSBI.
Diversification Opportunities for CHINA HUARONG and CREMECOMTRSBI
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and CREMECOMTRSBI is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and CREMECOMTRSBI DL 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREMECOMTRSBI DL 001 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 CREMECOMTRSBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREMECOMTRSBI DL 001 has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and CREMECOMTRSBI go up and down completely randomly.
Pair Corralation between CHINA HUARONG and CREMECOMTRSBI
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the CREMECOMTRSBI. But the stock apears to be less risky and, when comparing its historical volatility, CHINA HUARONG ENERHD 50 is 6.32 times less risky than CREMECOMTRSBI. The stock trades about -0.03 of its potential returns per unit of risk. The CREMECOMTRSBI DL 001 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 34.00 in CREMECOMTRSBI DL 001 on September 12, 2024 and sell it today you would lose (14.00) from holding CREMECOMTRSBI DL 001 or give up 41.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. CREMECOMTRSBI DL 001
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| CREMECOMTRSBI DL 001 |
CHINA HUARONG and CREMECOMTRSBI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and CREMECOMTRSBI
The main advantage of trading using opposite CHINA HUARONG and CREMECOMTRSBI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, CREMECOMTRSBI 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 CREMECOMTRSBI will offset losses from the drop in CREMECOMTRSBI'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 |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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