Correlation Between Do Fluoride and Harbin Hatou

Can any of the company-specific risk be diversified away by investing in both Do Fluoride and Harbin Hatou 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 Do Fluoride and Harbin Hatou into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Do Fluoride Chemicals Co and Harbin Hatou Investment, you can compare the effects of market volatilities on Do Fluoride and Harbin Hatou 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 Do Fluoride with a short position of Harbin Hatou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Do Fluoride and Harbin Hatou.

Diversification Opportunities for Do Fluoride and Harbin Hatou

0.77

Correlation Coefficient

Do Fluoride  Harbin Hatou

Poor diversification

The 3 months correlation between 002407 and Harbin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Do Fluoride Chemicals Co and Harbin Hatou Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbin Hatou Investment and Do Fluoride 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 Do Fluoride Chemicals Co are associated (or correlated) with Harbin Hatou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbin Hatou Investment has no effect on the direction of Do Fluoride i.e., Do Fluoride and Harbin Hatou go up and down completely randomly.

Pair Corralation between Do Fluoride and Harbin Hatou

Assuming the 90 days trading horizon Do Fluoride is expected to generate 2.22 times less return on investment than Harbin Hatou. But when comparing it to its historical volatility, Do Fluoride Chemicals Co is 1.34 times less risky than Harbin Hatou. It trades about 0.06 of its potential returns per unit of risk. Harbin Hatou Investment is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  676.00  in Harbin Hatou Investment on September 30, 2024 and sell it today you would earn a total of  98.00  from holding Harbin Hatou Investment or generate 14.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Do Fluoride Chemicals Co  vs.  Harbin Hatou Investment

Do Fluoride Chemicals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Do Fluoride Chemicals Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Do Fluoride is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harbin Hatou Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbin Hatou Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harbin Hatou sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Do Fluoride and Harbin Hatou

The main advantage of trading using opposite Do Fluoride and Harbin Hatou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Do Fluoride position performs unexpectedly, Harbin Hatou 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 Harbin Hatou will offset losses from the drop in Harbin Hatou's long position.

The idea behind Do Fluoride Chemicals Co and Harbin Hatou Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.