Correlation Between Basso Industry and Zeng Hsing
Can any of the company-specific risk be diversified away by investing in both Basso Industry and Zeng Hsing 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 Basso Industry and Zeng Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basso Industry Corp and Zeng Hsing Industrial, you can compare the effects of market volatilities on Basso Industry and Zeng Hsing 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 Basso Industry with a short position of Zeng Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basso Industry and Zeng Hsing.
Diversification Opportunities for Basso Industry and Zeng Hsing
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Basso and Zeng is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Basso Industry Corp and Zeng Hsing Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeng Hsing Industrial and Basso Industry 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 Basso Industry Corp are associated (or correlated) with Zeng Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeng Hsing Industrial has no effect on the direction of Basso Industry i.e., Basso Industry and Zeng Hsing go up and down completely randomly.
Pair Corralation between Basso Industry and Zeng Hsing
Assuming the 90 days trading horizon Basso Industry Corp is expected to generate 0.86 times more return on investment than Zeng Hsing. However, Basso Industry Corp is 1.16 times less risky than Zeng Hsing. It trades about -0.06 of its potential returns per unit of risk. Zeng Hsing Industrial is currently generating about -0.11 per unit of risk. If you would invest 4,360 in Basso Industry Corp on August 30, 2024 and sell it today you would lose (65.00) from holding Basso Industry Corp or give up 1.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Basso Industry Corp vs. Zeng Hsing Industrial
Performance |
| Timeline |
| Basso Industry Corp |
| Zeng Hsing Industrial |
Basso Industry and Zeng Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Basso Industry and Zeng Hsing
The main advantage of trading using opposite Basso Industry and Zeng Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basso Industry position performs unexpectedly, Zeng Hsing 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 Zeng Hsing will offset losses from the drop in Zeng Hsing's long position.| Basso Industry vs. Yulon Finance Corp | Basso Industry vs. Taiwan Secom Co | Basso Industry vs. Great Wall Enterprise |
| Zeng Hsing vs. TTET Union Corp | Zeng Hsing vs. Shinkong Insurance Co | Zeng Hsing vs. Huaku Development Co | Zeng Hsing vs. China Steel Chemical |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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