Correlation Between Hsing Ta and Alcor Micro
Can any of the company-specific risk be diversified away by investing in both Hsing Ta and Alcor Micro 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 Alcor Micro 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 Alcor Micro, you can compare the effects of market volatilities on Hsing Ta and Alcor Micro 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 Alcor Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsing Ta and Alcor Micro.
Diversification Opportunities for Hsing Ta and Alcor Micro
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hsing and Alcor is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hsing Ta Cement and Alcor Micro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcor Micro 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 Alcor Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcor Micro has no effect on the direction of Hsing Ta i.e., Hsing Ta and Alcor Micro go up and down completely randomly.
Pair Corralation between Hsing Ta and Alcor Micro
Assuming the 90 days trading horizon Hsing Ta Cement is expected to under-perform the Alcor Micro. But the stock apears to be less risky and, when comparing its historical volatility, Hsing Ta Cement is 8.23 times less risky than Alcor Micro. The stock trades about -0.07 of its potential returns per unit of risk. The Alcor Micro is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 12,800 in Alcor Micro on September 12, 2024 and sell it today you would earn a total of 1,600 from holding Alcor Micro or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hsing Ta Cement vs. Alcor Micro
Performance |
| Timeline |
| Hsing Ta Cement |
| Alcor Micro |
Hsing Ta and Alcor Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsing Ta and Alcor Micro
The main advantage of trading using opposite Hsing Ta and Alcor Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsing Ta position performs unexpectedly, Alcor Micro 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 Alcor Micro will offset losses from the drop in Alcor Micro's long position.| Hsing Ta vs. Tainan Spinning Co | Hsing Ta vs. Lealea Enterprise Co | Hsing Ta vs. China Petrochemical Development | Hsing Ta vs. Ruentex Development Co |
| Alcor Micro vs. Cayman Tung Ling | Alcor Micro vs. Hsing Ta Cement | Alcor Micro vs. Bank of Kaohsiung | Alcor Micro vs. Hi Sharp Electronics |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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