Correlation Between Hua Hong and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both Hua Hong and Insteel Industries 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 Hong and Insteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hua Hong Semiconductor and Insteel Industries, you can compare the effects of market volatilities on Hua Hong and Insteel Industries 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 Hong with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and Insteel Industries.
Diversification Opportunities for Hua Hong and Insteel Industries
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hua and Insteel is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and Hua Hong 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 Hong Semiconductor are associated (or correlated) with Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Hua Hong i.e., Hua Hong and Insteel Industries go up and down completely randomly.
Pair Corralation between Hua Hong and Insteel Industries
Assuming the 90 days horizon Hua Hong Semiconductor is expected to generate 2.22 times more return on investment than Insteel Industries. However, Hua Hong is 2.22 times more volatile than Insteel Industries. It trades about 0.0 of its potential returns per unit of risk. Insteel Industries is currently generating about -0.54 per unit of risk. If you would invest 260.00 in Hua Hong Semiconductor on October 11, 2024 and sell it today you would lose (2.00) from holding Hua Hong Semiconductor or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Hua Hong Semiconductor vs. Insteel Industries
Performance |
| Timeline |
| Hua Hong Semiconductor |
| Insteel Industries |
Hua Hong and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Hong and Insteel Industries
The main advantage of trading using opposite Hua Hong and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Hong position performs unexpectedly, Insteel Industries 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.| Hua Hong vs. Guangdong Investment Limited | Hua Hong vs. Auto Trader Group | Hua Hong vs. MARKET VECTR RETAIL | Hua Hong vs. PennantPark Investment |
| Insteel Industries vs. Jacquet Metal Service | Insteel Industries vs. FIREWEED METALS P | Insteel Industries vs. ELMOS SEMICONDUCTOR | Insteel Industries vs. Hua Hong Semiconductor |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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