Correlation Between Huazhu and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Huazhu and Agilent Technologies 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 Huazhu and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huazhu Group and Agilent Technologies, you can compare the effects of market volatilities on Huazhu and Agilent Technologies 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 Huazhu with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huazhu and Agilent Technologies.
Diversification Opportunities for Huazhu and Agilent Technologies
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huazhu and Agilent is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Huazhu Group and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Huazhu 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 Huazhu Group are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Huazhu i.e., Huazhu and Agilent Technologies go up and down completely randomly.
Pair Corralation between Huazhu and Agilent Technologies
Given the investment horizon of 90 days Huazhu is expected to generate 3.3 times less return on investment than Agilent Technologies. In addition to that, Huazhu is 1.38 times more volatile than Agilent Technologies. It trades about 0.03 of its total potential returns per unit of risk. Agilent Technologies is currently generating about 0.14 per unit of volatility. If you would invest 10,243 in Agilent Technologies on January 25, 2024 and sell it today you would earn a total of 3,506 from holding Agilent Technologies or generate 34.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huazhu Group vs. Agilent Technologies
Performance |
| Timeline |
| Huazhu Group |
| Agilent Technologies |
Huazhu and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huazhu and Agilent Technologies
The main advantage of trading using opposite Huazhu and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huazhu position performs unexpectedly, Agilent Technologies 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 Agilent Technologies will offset losses from the drop in Agilent Technologies' long position.| Huazhu vs. GreenTree Hospitality Group | Huazhu vs. Soho House Co | Huazhu vs. InterContinental Hotels Group | Huazhu vs. The Intergroup |
| Agilent Technologies vs. Fonar | Agilent Technologies vs. Burning Rock BiotechLtd | Agilent Technologies vs. Sera Prognostics | Agilent Technologies vs. Psychemedics |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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