Correlation Between Hong Tai and Sampo Corp
Can any of the company-specific risk be diversified away by investing in both Hong Tai 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 Hong Tai and Sampo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Tai Electric and Sampo Corp, you can compare the effects of market volatilities on Hong Tai 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 Hong Tai with a short position of Sampo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Tai and Sampo Corp.
Diversification Opportunities for Hong Tai and Sampo Corp
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hong and Sampo is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hong Tai Electric and Sampo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sampo Corp and Hong Tai 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 Tai Electric 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 Hong Tai i.e., Hong Tai and Sampo Corp go up and down completely randomly.
Pair Corralation between Hong Tai and Sampo Corp
Assuming the 90 days trading horizon Hong Tai Electric is expected to under-perform the Sampo Corp. In addition to that, Hong Tai is 2.95 times more volatile than Sampo Corp. It trades about -0.11 of its total potential returns per unit of risk. Sampo Corp is currently generating about -0.04 per unit of volatility. If you would invest 2,840 in Sampo Corp on October 26, 2024 and sell it today you would lose (35.00) from holding Sampo Corp or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Tai Electric vs. Sampo Corp
Performance |
| Timeline |
| Hong Tai Electric |
| Sampo Corp |
Hong Tai and Sampo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Tai and Sampo Corp
The main advantage of trading using opposite Hong Tai and Sampo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Tai 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.| Hong Tai vs. Ta Ya Electric | Hong Tai vs. Hua Eng Wire | Hong Tai vs. Walsin Lihwa Corp | Hong Tai 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |