Correlation Between Falcon Power and Hsinjing Holding
Can any of the company-specific risk be diversified away by investing in both Falcon Power and Hsinjing Holding 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 Falcon Power and Hsinjing Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Power Co and Hsinjing Holding Co, you can compare the effects of market volatilities on Falcon Power and Hsinjing Holding 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 Falcon Power with a short position of Hsinjing Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Power and Hsinjing Holding.
Diversification Opportunities for Falcon Power and Hsinjing Holding
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Falcon and Hsinjing is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Power Co and Hsinjing Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hsinjing Holding and Falcon Power 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 Falcon Power Co are associated (or correlated) with Hsinjing Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hsinjing Holding has no effect on the direction of Falcon Power i.e., Falcon Power and Hsinjing Holding go up and down completely randomly.
Pair Corralation between Falcon Power and Hsinjing Holding
Assuming the 90 days trading horizon Falcon Power Co is expected to under-perform the Hsinjing Holding. In addition to that, Falcon Power is 2.72 times more volatile than Hsinjing Holding Co. It trades about -0.16 of its total potential returns per unit of risk. Hsinjing Holding Co is currently generating about 0.34 per unit of volatility. If you would invest 2,160 in Hsinjing Holding Co on November 5, 2024 and sell it today you would earn a total of 115.00 from holding Hsinjing Holding Co or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Power Co vs. Hsinjing Holding Co
Performance |
| Timeline |
| Falcon Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hsinjing Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Falcon Power and Hsinjing Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Power and Hsinjing Holding
The main advantage of trading using opposite Falcon Power and Hsinjing Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Power position performs unexpectedly, Hsinjing Holding 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 Hsinjing Holding will offset losses from the drop in Hsinjing Holding's long position.The idea behind Falcon Power Co and Hsinjing Holding Co 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.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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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