Correlation Between Hong Kong and China Gas

By analyzing existing cross correlation between Hong Kong China and China Gas Hlds, you can compare the effects of market volatilities on Hong Kong and China Gas 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 Hong Kong with a short position of China Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and China Gas.

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Can any of the company-specific risk be diversified away by investing in both Hong Kong and China Gas 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 Hong Kong and China Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Hong Kong and China Gas

0.44
  Correlation Coefficient
Hong Kong China
China Gas Hlds

Very weak diversification

The 23 months correlation between HOKCF and China is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong China and China Gas Hlds in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on China Gas Hlds and Hong Kong 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 Hong Kong China are associated (or correlated) with China Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Gas Hlds has no effect on the direction of Hong Kong i.e., Hong Kong and China Gas go up and down completely randomly.

Pair Corralation between Hong Kong and China Gas

If you would invest (100.00)  in China Gas Hlds on May 5, 2021 and sell it today you would earn a total of  100.00  from holding China Gas Hlds or generate -100.0% return on investment over 90 days.
Time Period23 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Hong Kong China  vs.  China Gas Hlds

 Performance (%) 
      Timeline 
Hong Kong China 
 HOKCF Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hong Kong China are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Hong Kong exhibited solid returns over the last few months and may actually be approaching a breakup point.

HOKCF Price Channel

China Gas Hlds 
 China Performance
0 of 100
Over the last 90 days China Gas Hlds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, China Gas is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

China Price Channel

Hong Kong and China Gas Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Hong Kong and China Gas

The main advantage of trading using opposite Hong Kong and China Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, China Gas 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 China Gas will offset losses from the drop in China Gas' long position.
The idea behind Hong Kong China and China Gas Hlds 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.
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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