Correlation Between Everest Textile and Hong Yi
Can any of the company-specific risk be diversified away by investing in both Everest Textile and Hong Yi 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 Everest Textile and Hong Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everest Textile Co and Hong Yi Fiber, you can compare the effects of market volatilities on Everest Textile and Hong Yi 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 Everest Textile with a short position of Hong Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everest Textile and Hong Yi.
Diversification Opportunities for Everest Textile and Hong Yi
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Everest and Hong is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Everest Textile Co and Hong Yi Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Yi Fiber and Everest Textile 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 Everest Textile Co are associated (or correlated) with Hong Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Yi Fiber has no effect on the direction of Everest Textile i.e., Everest Textile and Hong Yi go up and down completely randomly.
Pair Corralation between Everest Textile and Hong Yi
Assuming the 90 days trading horizon Everest Textile Co is expected to generate 0.95 times more return on investment than Hong Yi. However, Everest Textile Co is 1.05 times less risky than Hong Yi. It trades about -0.03 of its potential returns per unit of risk. Hong Yi Fiber is currently generating about -0.13 per unit of risk. If you would invest 714.00 in Everest Textile Co on September 2, 2024 and sell it today you would lose (5.00) from holding Everest Textile Co or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Everest Textile Co vs. Hong Yi Fiber
Performance |
| Timeline |
| Everest Textile |
| Hong Yi Fiber |
Everest Textile and Hong Yi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everest Textile and Hong Yi
The main advantage of trading using opposite Everest Textile and Hong Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everest Textile position performs unexpectedly, Hong Yi 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 Yi will offset losses from the drop in Hong Yi's long position.| Everest Textile vs. Chaintech Technology Corp | Everest Textile vs. Avision | Everest Textile vs. Clevo Co | Everest Textile vs. Elitegroup Computer Systems |
| Hong Yi vs. Yi Jinn Industrial | Hong Yi vs. Zig Sheng Industrial | Hong Yi vs. Lan Fa Textile | Hong Yi vs. Tainan Spinning 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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