Correlation Between Great Wall and Hey Song
Can any of the company-specific risk be diversified away by investing in both Great Wall and Hey Song 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 Great Wall and Hey Song into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Hey Song Corp, you can compare the effects of market volatilities on Great Wall and Hey Song 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 Great Wall with a short position of Hey Song. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Hey Song.
Diversification Opportunities for Great Wall and Hey Song
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Great and Hey is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Hey Song Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hey Song Corp and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Hey Song. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hey Song Corp has no effect on the direction of Great Wall i.e., Great Wall and Hey Song go up and down completely randomly.
Pair Corralation between Great Wall and Hey Song
Assuming the 90 days trading horizon Great Wall Enterprise is expected to generate 1.32 times more return on investment than Hey Song. However, Great Wall is 1.32 times more volatile than Hey Song Corp. It trades about 0.31 of its potential returns per unit of risk. Hey Song Corp is currently generating about 0.05 per unit of risk. If you would invest 5,120 in Great Wall Enterprise on September 1, 2024 and sell it today you would earn a total of 210.00 from holding Great Wall Enterprise or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Hey Song Corp
Performance |
| Timeline |
| Great Wall Enterprise |
| Hey Song Corp |
Great Wall and Hey Song Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Hey Song
The main advantage of trading using opposite Great Wall and Hey Song positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Hey Song 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 Hey Song will offset losses from the drop in Hey Song's long position.| Great Wall vs. De Licacy Industrial | Great Wall vs. Wisher Industrial Co | Great Wall vs. Tainan Enterprises Co |
| Hey Song vs. De Licacy Industrial | Hey Song vs. Wisher Industrial Co | Hey Song vs. Tainan Enterprises 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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