Correlation Between Global PMX and Hu Lane
Can any of the company-specific risk be diversified away by investing in both Global PMX and Hu Lane 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 Global PMX and Hu Lane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global PMX Co and Hu Lane Associate, you can compare the effects of market volatilities on Global PMX and Hu Lane 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 Global PMX with a short position of Hu Lane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global PMX and Hu Lane.
Diversification Opportunities for Global PMX and Hu Lane
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and 6279 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Global PMX Co and Hu Lane Associate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hu Lane Associate and Global PMX 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 Global PMX Co are associated (or correlated) with Hu Lane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hu Lane Associate has no effect on the direction of Global PMX i.e., Global PMX and Hu Lane go up and down completely randomly.
Pair Corralation between Global PMX and Hu Lane
Assuming the 90 days trading horizon Global PMX Co is expected to under-perform the Hu Lane. In addition to that, Global PMX is 1.69 times more volatile than Hu Lane Associate. It trades about -0.09 of its total potential returns per unit of risk. Hu Lane Associate is currently generating about -0.03 per unit of volatility. If you would invest 18,750 in Hu Lane Associate on September 23, 2024 and sell it today you would lose (800.00) from holding Hu Lane Associate or give up 4.27% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Global PMX Co vs. Hu Lane Associate
Performance |
Timeline |
Global PMX |
Hu Lane Associate |
Global PMX and Hu Lane Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global PMX and Hu Lane
The main advantage of trading using opposite Global PMX and Hu Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global PMX position performs unexpectedly, Hu Lane 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 Hu Lane will offset losses from the drop in Hu Lane's long position.Global PMX vs. Hota Industrial Mfg | Global PMX vs. BizLink Holding | Global PMX vs. Cub Elecparts | Global PMX vs. Hu Lane Associate |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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