Correlation Between Hua Eng and Sampo Corp
Can any of the company-specific risk be diversified away by investing in both Hua Eng and Sampo Corp 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 Hua Eng and Sampo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hua Eng Wire and Sampo Corp, you can compare the effects of market volatilities on Hua Eng and Sampo Corp 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 Hua Eng with a short position of Sampo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Eng and Sampo Corp.
Diversification Opportunities for Hua Eng and Sampo Corp
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hua and Sampo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hua Eng Wire and Sampo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sampo Corp and Hua Eng 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 Hua Eng Wire are associated (or correlated) with Sampo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sampo Corp has no effect on the direction of Hua Eng i.e., Hua Eng and Sampo Corp go up and down completely randomly.
Pair Corralation between Hua Eng and Sampo Corp
Assuming the 90 days trading horizon Hua Eng Wire is expected to under-perform the Sampo Corp. In addition to that, Hua Eng is 3.69 times more volatile than Sampo Corp. It trades about -0.06 of its total potential returns per unit of risk. Sampo Corp is currently generating about -0.02 per unit of volatility. If you would invest 2,880 in Sampo Corp on September 3, 2024 and sell it today you would lose (50.00) from holding Sampo Corp or give up 1.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Eng Wire vs. Sampo Corp
Performance |
| Timeline |
| Hua Eng Wire |
| Sampo Corp |
Hua Eng and Sampo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Eng and Sampo Corp
The main advantage of trading using opposite Hua Eng and Sampo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Eng position performs unexpectedly, Sampo Corp 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 Sampo Corp will offset losses from the drop in Sampo Corp's long position.| Hua Eng vs. Walsin Lihwa Corp | Hua Eng vs. Ta Ya Electric | Hua Eng vs. Hong Tai Electric | Hua Eng vs. Sampo Corp |
| Sampo Corp vs. TECO Electric Machinery | Sampo Corp vs. Walsin Lihwa Corp | Sampo Corp vs. Asia Cement Corp | Sampo Corp vs. Far Eastern New |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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