Correlation Between Hainan HNA and Dynagreen Environmental

Can any of the company-specific risk be diversified away by investing in both Hainan HNA and Dynagreen Environmental 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 Hainan HNA and Dynagreen Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hainan HNA Infrastructure and Dynagreen Environmental Protection, you can compare the effects of market volatilities on Hainan HNA and Dynagreen Environmental 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 Hainan HNA with a short position of Dynagreen Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan HNA and Dynagreen Environmental.

Diversification Opportunities for Hainan HNA and Dynagreen Environmental

0.89

Correlation Coefficient

Hainan HNA  Dynagreen Environmental

Very poor diversification

The 3 months correlation between Hainan and Dynagreen is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hainan HNA Infrastructure and Dynagreen Environmental Protec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynagreen Environmental and Hainan HNA 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 Hainan HNA Infrastructure are associated (or correlated) with Dynagreen Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynagreen Environmental has no effect on the direction of Hainan HNA i.e., Hainan HNA and Dynagreen Environmental go up and down completely randomly.

Pair Corralation between Hainan HNA and Dynagreen Environmental

Assuming the 90 days trading horizon Hainan HNA is expected to generate 1.28 times less return on investment than Dynagreen Environmental. In addition to that, Hainan HNA is 1.49 times more volatile than Dynagreen Environmental Protection. It trades about 0.02 of its total potential returns per unit of risk. Dynagreen Environmental Protection is currently generating about 0.04 per unit of volatility. If you would invest  646.00  in Dynagreen Environmental Protection on September 28, 2024 and sell it today you would earn a total of  26.00  from holding Dynagreen Environmental Protection or generate 4.02% return on investment over 90 days.

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

Hainan HNA Infrastructure  vs.  Dynagreen Environmental Protec

Hainan HNA Infrastructure

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hainan HNA Infrastructure are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hainan HNA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dynagreen Environmental

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dynagreen Environmental Protection are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dynagreen Environmental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hainan HNA and Dynagreen Environmental

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

The idea behind Hainan HNA Infrastructure and Dynagreen Environmental Protection 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.