Correlation Between Hong Tai and Sunny Friend
Can any of the company-specific risk be diversified away by investing in both Hong Tai and Sunny Friend 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 Sunny Friend 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 Sunny Friend Environmental, you can compare the effects of market volatilities on Hong Tai and Sunny Friend 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 Sunny Friend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Tai and Sunny Friend.
Diversification Opportunities for Hong Tai and Sunny Friend
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hong and Sunny is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hong Tai Electric and Sunny Friend Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Friend Environ 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 Sunny Friend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Friend Environ has no effect on the direction of Hong Tai i.e., Hong Tai and Sunny Friend go up and down completely randomly.
Pair Corralation between Hong Tai and Sunny Friend
Assuming the 90 days trading horizon Hong Tai is expected to generate 1.72 times less return on investment than Sunny Friend. But when comparing it to its historical volatility, Hong Tai Electric is 1.34 times less risky than Sunny Friend. It trades about 0.0 of its potential returns per unit of risk. Sunny Friend Environmental is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 9,230 in Sunny Friend Environmental on August 30, 2024 and sell it today you would lose (50.00) from holding Sunny Friend Environmental or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Tai Electric vs. Sunny Friend Environmental
Performance |
| Timeline |
| Hong Tai Electric |
| Sunny Friend Environ |
Hong Tai and Sunny Friend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Tai and Sunny Friend
The main advantage of trading using opposite Hong Tai and Sunny Friend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Tai position performs unexpectedly, Sunny Friend 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 Sunny Friend will offset losses from the drop in Sunny Friend'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 |
| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. ECOVE Environment Corp | Sunny Friend vs. TTET Union Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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