Correlation Between Carnival Industrial and Hong Ho
Can any of the company-specific risk be diversified away by investing in both Carnival Industrial and Hong Ho 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 Carnival Industrial and Hong Ho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival Industrial Corp and Hong Ho Precision, you can compare the effects of market volatilities on Carnival Industrial and Hong Ho 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 Carnival Industrial with a short position of Hong Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Industrial and Hong Ho.
Diversification Opportunities for Carnival Industrial and Hong Ho
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Carnival and Hong is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Industrial Corp and Hong Ho Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Ho Precision and Carnival Industrial 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 Carnival Industrial Corp are associated (or correlated) with Hong Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Ho Precision has no effect on the direction of Carnival Industrial i.e., Carnival Industrial and Hong Ho go up and down completely randomly.
Pair Corralation between Carnival Industrial and Hong Ho
Assuming the 90 days trading horizon Carnival Industrial Corp is expected to under-perform the Hong Ho. But the stock apears to be less risky and, when comparing its historical volatility, Carnival Industrial Corp is 2.46 times less risky than Hong Ho. The stock trades about -0.08 of its potential returns per unit of risk. The Hong Ho Precision is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,770 in Hong Ho Precision on September 3, 2024 and sell it today you would earn a total of 1,610 from holding Hong Ho Precision or generate 42.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnival Industrial Corp vs. Hong Ho Precision
Performance |
| Timeline |
| Carnival Industrial Corp |
| Hong Ho Precision |
Carnival Industrial and Hong Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival Industrial and Hong Ho
The main advantage of trading using opposite Carnival Industrial and Hong Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival Industrial position performs unexpectedly, Hong Ho 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 Hong Ho will offset losses from the drop in Hong Ho's long position.| Carnival Industrial vs. Tainan Spinning Co | Carnival Industrial vs. Chia Her Industrial | Carnival Industrial vs. WiseChip Semiconductor | Carnival Industrial vs. Novatek Microelectronics Corp |
| Hong Ho vs. Everest Textile Co | Hong Ho vs. Hong Yi Fiber | Hong Ho vs. Yi Jinn Industrial | Hong Ho vs. Carnival Industrial Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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