Correlation Between Huafa Industrial and Sinomach Automobile
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By analyzing existing cross correlation between Huafa Industrial Co and Sinomach Automobile Co, you can compare the effects of market volatilities on Huafa Industrial and Sinomach Automobile 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 Huafa Industrial with a short position of Sinomach Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huafa Industrial and Sinomach Automobile.
Diversification Opportunities for Huafa Industrial and Sinomach Automobile
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huafa and Sinomach is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Huafa Industrial Co and Sinomach Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinomach Automobile and Huafa Industrial 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 Huafa Industrial Co are associated (or correlated) with Sinomach Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinomach Automobile has no effect on the direction of Huafa Industrial i.e., Huafa Industrial and Sinomach Automobile go up and down completely randomly.
Pair Corralation between Huafa Industrial and Sinomach Automobile
Assuming the 90 days trading horizon Huafa Industrial Co is expected to under-perform the Sinomach Automobile. But the stock apears to be less risky and, when comparing its historical volatility, Huafa Industrial Co is 1.18 times less risky than Sinomach Automobile. The stock trades about -0.02 of its potential returns per unit of risk. The Sinomach Automobile Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 777.00 in Sinomach Automobile Co on September 21, 2024 and sell it today you would lose (68.00) from holding Sinomach Automobile Co or give up 8.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Huafa Industrial Co vs. Sinomach Automobile Co
Performance |
Timeline |
Huafa Industrial |
Sinomach Automobile |
Huafa Industrial and Sinomach Automobile Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Huafa Industrial and Sinomach Automobile
The main advantage of trading using opposite Huafa Industrial and Sinomach Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huafa Industrial position performs unexpectedly, Sinomach Automobile 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 Sinomach Automobile will offset losses from the drop in Sinomach Automobile's long position.Huafa Industrial vs. Super Dragon Engineering Plastics | Huafa Industrial vs. Changjiang Publishing Media | Huafa Industrial vs. Xinhua Winshare Publishing | Huafa Industrial vs. Hangzhou Gaoxin Rubber |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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