Correlation Between CHINA HUARONG and INVION
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and INVION 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 CHINA HUARONG and INVION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA HUARONG ENERHD 50 and INVION, you can compare the effects of market volatilities on CHINA HUARONG and INVION 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 CHINA HUARONG with a short position of INVION. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and INVION.
Diversification Opportunities for CHINA HUARONG and INVION
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and INVION is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and INVION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVION and CHINA HUARONG 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 CHINA HUARONG ENERHD 50 are associated (or correlated) with INVION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVION has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and INVION go up and down completely randomly.
Pair Corralation between CHINA HUARONG and INVION
Assuming the 90 days trading horizon CHINA HUARONG is expected to generate 6.97 times less return on investment than INVION. But when comparing it to its historical volatility, CHINA HUARONG ENERHD 50 is 1.52 times less risky than INVION. It trades about 0.07 of its potential returns per unit of risk. INVION is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 5.00 in INVION on September 25, 2024 and sell it today you would earn a total of 12.00 from holding INVION or generate 240.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. INVION
Performance |
Timeline |
CHINA HUARONG ENERHD |
INVION |
CHINA HUARONG and INVION Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CHINA HUARONG and INVION
The main advantage of trading using opposite CHINA HUARONG and INVION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, INVION 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 INVION will offset losses from the drop in INVION's long position.CHINA HUARONG vs. Alibaba Group Holding | CHINA HUARONG vs. ConocoPhillips | CHINA HUARONG vs. CNOOC | CHINA HUARONG vs. EOG Resources |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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