Correlation Between China Gas and Hong Kong
Can any of the company-specific risk be diversified away by investing in both China Gas and Hong Kong 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 Gas and Hong Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Gas Holdings and Hong Kong And, you can compare the effects of market volatilities on China Gas and Hong Kong 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 Gas with a short position of Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Gas and Hong Kong.
Diversification Opportunities for China Gas and Hong Kong
Average diversification
The 3 months correlation between China and Hong is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding China Gas Holdings and Hong Kong And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong And and China Gas 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 Gas Holdings are associated (or correlated) with Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong And has no effect on the direction of China Gas i.e., China Gas and Hong Kong go up and down completely randomly.
Pair Corralation between China Gas and Hong Kong
Assuming the 90 days horizon China Gas Holdings is expected to generate 1.05 times more return on investment than Hong Kong. However, China Gas is 1.05 times more volatile than Hong Kong And. It trades about 0.1 of its potential returns per unit of risk. Hong Kong And is currently generating about 0.01 per unit of risk. If you would invest 2,208 in China Gas Holdings on December 29, 2023 and sell it today you would earn a total of 110.00 from holding China Gas Holdings or generate 4.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
China Gas Holdings vs. Hong Kong And
Performance |
Timeline |
China Gas Holdings |
Hong Kong And |
China Gas and Hong Kong Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Gas and Hong Kong
The main advantage of trading using opposite China Gas and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Gas position performs unexpectedly, Hong Kong 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 Hong Kong will offset losses from the drop in Hong Kong's long position.China Gas vs. United Guardian | China Gas vs. Timken Company | China Gas vs. Diageo PLC ADR | China Gas vs. Unilever PLC ADR |
Hong Kong vs. NLIGHT Inc | Hong Kong vs. Avarone Metals | Hong Kong vs. Vulcan Materials | Hong Kong vs. BK Technologies |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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