Correlation Between Hi Lai and China Times
Can any of the company-specific risk be diversified away by investing in both Hi Lai and China Times 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 China Times 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 China Times Publishing, you can compare the effects of market volatilities on Hi Lai and China Times 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 China Times. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Lai and China Times.
Diversification Opportunities for Hi Lai and China Times
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between 1268 and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hi Lai Foods Co and China Times Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Times Publishing 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 China Times. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Times Publishing has no effect on the direction of Hi Lai i.e., Hi Lai and China Times go up and down completely randomly.
Pair Corralation between Hi Lai and China Times
Assuming the 90 days trading horizon Hi Lai Foods Co is expected to under-perform the China Times. But the stock apears to be less risky and, when comparing its historical volatility, Hi Lai Foods Co is 7.5 times less risky than China Times. The stock trades about -0.04 of its potential returns per unit of risk. The China Times Publishing is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,915 in China Times Publishing on August 30, 2024 and sell it today you would lose (60.00) from holding China Times Publishing or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Hi Lai Foods Co vs. China Times Publishing
Performance |
| Timeline |
| Hi Lai Foods |
| China Times Publishing |
Hi Lai and China Times Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hi Lai and China Times
The main advantage of trading using opposite Hi Lai and China Times positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Lai position performs unexpectedly, China Times 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 China Times will offset losses from the drop in China Times' long position.The idea behind Hi Lai Foods Co and China Times Publishing pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| China Times vs. YuantaP shares Taiwan Electronics | China Times vs. YuantaP shares Taiwan Top | China Times vs. YuantaP shares Taiwan Mid Cap | China Times vs. Fubon MSCI Taiwan |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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