Correlation Between Evermore Chemical and Ho Tung
Can any of the company-specific risk be diversified away by investing in both Evermore Chemical and Ho Tung 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 Evermore Chemical and Ho Tung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evermore Chemical Industry and Ho Tung Chemical, you can compare the effects of market volatilities on Evermore Chemical and Ho Tung 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 Evermore Chemical with a short position of Ho Tung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evermore Chemical and Ho Tung.
Diversification Opportunities for Evermore Chemical and Ho Tung
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evermore and 1714 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Evermore Chemical Industry and Ho Tung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ho Tung Chemical and Evermore Chemical 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 Evermore Chemical Industry are associated (or correlated) with Ho Tung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ho Tung Chemical has no effect on the direction of Evermore Chemical i.e., Evermore Chemical and Ho Tung go up and down completely randomly.
Pair Corralation between Evermore Chemical and Ho Tung
Assuming the 90 days trading horizon Evermore Chemical Industry is expected to under-perform the Ho Tung. In addition to that, Evermore Chemical is 3.05 times more volatile than Ho Tung Chemical. It trades about -0.15 of its total potential returns per unit of risk. Ho Tung Chemical is currently generating about -0.08 per unit of volatility. If you would invest 851.00 in Ho Tung Chemical on September 12, 2024 and sell it today you would lose (10.00) from holding Ho Tung Chemical or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evermore Chemical Industry vs. Ho Tung Chemical
Performance |
| Timeline |
| Evermore Chemical |
| Ho Tung Chemical |
Evermore Chemical and Ho Tung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evermore Chemical and Ho Tung
The main advantage of trading using opposite Evermore Chemical and Ho Tung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evermore Chemical position performs unexpectedly, Ho Tung 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 Ho Tung will offset losses from the drop in Ho Tung's long position.| Evermore Chemical vs. Tainan Spinning Co | Evermore Chemical vs. Lealea Enterprise Co | Evermore Chemical vs. China Petrochemical Development | Evermore Chemical vs. Ruentex Development Co |
| Ho Tung vs. Tainan Spinning Co | Ho Tung vs. Lealea Enterprise Co | Ho Tung vs. China Petrochemical Development | Ho Tung vs. Ruentex Development Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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