Correlation Between Hong Yi and Everest Textile
Can any of the company-specific risk be diversified away by investing in both Hong Yi and Everest Textile 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 Hong Yi and Everest Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Yi Fiber and Everest Textile Co, you can compare the effects of market volatilities on Hong Yi and Everest Textile 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 Hong Yi with a short position of Everest Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Yi and Everest Textile.
Diversification Opportunities for Hong Yi and Everest Textile
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hong and Everest is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hong Yi Fiber and Everest Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everest Textile and Hong Yi 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 Hong Yi Fiber are associated (or correlated) with Everest Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everest Textile has no effect on the direction of Hong Yi i.e., Hong Yi and Everest Textile go up and down completely randomly.
Pair Corralation between Hong Yi and Everest Textile
Assuming the 90 days trading horizon Hong Yi Fiber is expected to under-perform the Everest Textile. But the stock apears to be less risky and, when comparing its historical volatility, Hong Yi Fiber is 1.77 times less risky than Everest Textile. The stock trades about -0.03 of its potential returns per unit of risk. The Everest Textile Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 754.00 in Everest Textile Co on September 4, 2024 and sell it today you would lose (39.00) from holding Everest Textile Co or give up 5.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Yi Fiber vs. Everest Textile Co
Performance |
| Timeline |
| Hong Yi Fiber |
| Everest Textile |
Hong Yi and Everest Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Yi and Everest Textile
The main advantage of trading using opposite Hong Yi and Everest Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Yi position performs unexpectedly, Everest Textile 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 Everest Textile will offset losses from the drop in Everest Textile's long position.| Hong Yi vs. Yi Jinn Industrial | Hong Yi vs. Zig Sheng Industrial | Hong Yi vs. Lan Fa Textile | Hong Yi vs. Tainan Spinning Co |
| Everest Textile vs. Far Eastern New | Everest Textile vs. Zig Sheng Industrial | Everest Textile vs. Eclat Textile Co | Everest Textile vs. Formosa Taffeta 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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