Correlation Between Hi Lai and Lihtai Construction
Can any of the company-specific risk be diversified away by investing in both Hi Lai and Lihtai Construction 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 Hi Lai and Lihtai Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hi Lai Foods Co and Lihtai Construction Enterprise, you can compare the effects of market volatilities on Hi Lai and Lihtai Construction 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 Hi Lai with a short position of Lihtai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Lai and Lihtai Construction.
Diversification Opportunities for Hi Lai and Lihtai Construction
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 1268 and Lihtai is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hi Lai Foods Co and Lihtai Construction Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lihtai Construction and Hi Lai 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 Hi Lai Foods Co are associated (or correlated) with Lihtai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lihtai Construction has no effect on the direction of Hi Lai i.e., Hi Lai and Lihtai Construction go up and down completely randomly.
Pair Corralation between Hi Lai and Lihtai Construction
Assuming the 90 days trading horizon Hi Lai Foods Co is expected to under-perform the Lihtai Construction. But the stock apears to be less risky and, when comparing its historical volatility, Hi Lai Foods Co is 1.11 times less risky than Lihtai Construction. The stock trades about -0.01 of its potential returns per unit of risk. The Lihtai Construction Enterprise is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,180 in Lihtai Construction Enterprise on September 2, 2024 and sell it today you would earn a total of 1,920 from holding Lihtai Construction Enterprise or generate 31.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hi Lai Foods Co vs. Lihtai Construction Enterprise
Performance |
| Timeline |
| Hi Lai Foods |
| Lihtai Construction |
Hi Lai and Lihtai Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hi Lai and Lihtai Construction
The main advantage of trading using opposite Hi Lai and Lihtai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Lai position performs unexpectedly, Lihtai Construction 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 Lihtai Construction will offset losses from the drop in Lihtai Construction's long position.| Hi Lai vs. Gourmet Master Co | Hi Lai vs. Wowprime Corp | Hi Lai vs. Louisa Professional Coffee | Hi Lai vs. An Shin Food Services |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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