Correlation Between New Hope and China Union
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By analyzing existing cross correlation between New Hope Dairy and China Union Holdings, you can compare the effects of market volatilities on New Hope and China Union 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 New Hope with a short position of China Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Hope and China Union.
Diversification Opportunities for New Hope and China Union
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and China is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding New Hope Dairy and China Union Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Union Holdings and New Hope 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 New Hope Dairy are associated (or correlated) with China Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Union Holdings has no effect on the direction of New Hope i.e., New Hope and China Union go up and down completely randomly.
Pair Corralation between New Hope and China Union
Assuming the 90 days trading horizon New Hope Dairy is expected to generate 0.91 times more return on investment than China Union. However, New Hope Dairy is 1.1 times less risky than China Union. It trades about 0.22 of its potential returns per unit of risk. China Union Holdings is currently generating about 0.15 per unit of risk. If you would invest 938.00 in New Hope Dairy on September 23, 2024 and sell it today you would earn a total of 562.00 from holding New Hope Dairy or generate 59.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
New Hope Dairy vs. China Union Holdings
Performance |
Timeline |
New Hope Dairy |
China Union Holdings |
New Hope and China Union Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Hope and China Union
The main advantage of trading using opposite New Hope and China Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Hope position performs unexpectedly, China Union 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 China Union will offset losses from the drop in China Union's long position.New Hope vs. China Railway Construction | New Hope vs. Henan Shuanghui Investment | New Hope vs. Kunwu Jiuding Investment | New Hope vs. Shenzhen Centralcon Investment |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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