Correlation Between CHINA HUARONG and Sino AG
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and Sino AG 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 Sino AG 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 Sino AG, you can compare the effects of market volatilities on CHINA HUARONG and Sino AG 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 Sino AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and Sino AG.
Diversification Opportunities for CHINA HUARONG and Sino AG
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and Sino is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and Sino AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino AG 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 Sino AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino AG has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and Sino AG go up and down completely randomly.
Pair Corralation between CHINA HUARONG and Sino AG
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to generate 18.09 times more return on investment than Sino AG. However, CHINA HUARONG is 18.09 times more volatile than Sino AG. It trades about 0.14 of its potential returns per unit of risk. Sino AG is currently generating about 0.11 per unit of risk. If you would invest 0.10 in CHINA HUARONG ENERHD 50 on September 12, 2024 and sell it today you would earn a total of 0.05 from holding CHINA HUARONG ENERHD 50 or generate 50.0% 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. Sino AG
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| Sino AG |
CHINA HUARONG and Sino AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and Sino AG
The main advantage of trading using opposite CHINA HUARONG and Sino AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, Sino AG 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 Sino AG will offset losses from the drop in Sino AG'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 |
| Sino AG vs. Superior Plus Corp | Sino AG vs. SIVERS SEMICONDUCTORS AB | Sino AG vs. CHINA HUARONG ENERHD 50 | Sino AG 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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