Correlation Between Hsing Ta and YCC Parts
Can any of the company-specific risk be diversified away by investing in both Hsing Ta and YCC Parts 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 Hsing Ta and YCC Parts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hsing Ta Cement and YCC Parts MFG, you can compare the effects of market volatilities on Hsing Ta and YCC Parts 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 Hsing Ta with a short position of YCC Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsing Ta and YCC Parts.
Diversification Opportunities for Hsing Ta and YCC Parts
Modest diversification
The 3 months correlation between Hsing and YCC is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hsing Ta Cement and YCC Parts MFG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YCC Parts MFG and Hsing Ta 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 Hsing Ta Cement are associated (or correlated) with YCC Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YCC Parts MFG has no effect on the direction of Hsing Ta i.e., Hsing Ta and YCC Parts go up and down completely randomly.
Pair Corralation between Hsing Ta and YCC Parts
Assuming the 90 days trading horizon Hsing Ta Cement is expected to generate 0.38 times more return on investment than YCC Parts. However, Hsing Ta Cement is 2.63 times less risky than YCC Parts. It trades about -0.03 of its potential returns per unit of risk. YCC Parts MFG is currently generating about -0.35 per unit of risk. If you would invest 1,850 in Hsing Ta Cement on August 26, 2024 and sell it today you would lose (5.00) from holding Hsing Ta Cement or give up 0.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hsing Ta Cement vs. YCC Parts MFG
Performance |
| Timeline |
| Hsing Ta Cement |
| YCC Parts MFG |
Hsing Ta and YCC Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsing Ta and YCC Parts
The main advantage of trading using opposite Hsing Ta and YCC Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsing Ta position performs unexpectedly, YCC Parts 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 YCC Parts will offset losses from the drop in YCC Parts' long position.| Hsing Ta vs. Cheng Shin Rubber | Hsing Ta vs. Taiwan Cement Corp | Hsing Ta vs. China Steel Chemical | Hsing Ta vs. Yulon Motor Co |
| YCC Parts vs. Taiwan Semiconductor Manufacturing | YCC Parts vs. Hon Hai Precision | YCC Parts vs. MediaTek | YCC Parts vs. Chunghwa Telecom 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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