Correlation Between HS Valve and Formetal
Can any of the company-specific risk be diversified away by investing in both HS Valve and Formetal 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 HS Valve and Formetal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HS Valve Co and Formetal Co, you can compare the effects of market volatilities on HS Valve and Formetal 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 HS Valve with a short position of Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of HS Valve and Formetal.
Diversification Opportunities for HS Valve and Formetal
Good diversification
The 3 months correlation between 039610 and Formetal is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding HS Valve Co and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal and HS Valve 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 HS Valve Co are associated (or correlated) with Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of HS Valve i.e., HS Valve and Formetal go up and down completely randomly.
Pair Corralation between HS Valve and Formetal
Assuming the 90 days trading horizon HS Valve Co is expected to generate 3.22 times more return on investment than Formetal. However, HS Valve is 3.22 times more volatile than Formetal Co. It trades about 0.16 of its potential returns per unit of risk. Formetal Co is currently generating about -0.27 per unit of risk. If you would invest 948,000 in HS Valve Co on September 1, 2024 and sell it today you would earn a total of 168,000 from holding HS Valve Co or generate 17.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
HS Valve Co vs. Formetal Co
Performance |
| Timeline |
| HS Valve |
| Formetal |
HS Valve and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HS Valve and Formetal
The main advantage of trading using opposite HS Valve and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HS Valve position performs unexpectedly, Formetal 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 Formetal will offset losses from the drop in Formetal's long position.| HS Valve vs. COWINTECH Co | HS Valve vs. Young Poong Precision | HS Valve vs. Seoam Machinery Industry | HS Valve vs. Haisung TPC Co |
| Formetal vs. COWINTECH Co | Formetal vs. Young Poong Precision | Formetal vs. Seoam Machinery Industry | Formetal vs. Haisung TPC Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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