Correlation Between Yieh Hsing and Basso Industry
Can any of the company-specific risk be diversified away by investing in both Yieh Hsing and Basso Industry 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 Yieh Hsing and Basso Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yieh Hsing Enterprise and Basso Industry Corp, you can compare the effects of market volatilities on Yieh Hsing and Basso Industry 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 Yieh Hsing with a short position of Basso Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yieh Hsing and Basso Industry.
Diversification Opportunities for Yieh Hsing and Basso Industry
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yieh and Basso is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Yieh Hsing Enterprise and Basso Industry Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basso Industry Corp and Yieh Hsing 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 Yieh Hsing Enterprise are associated (or correlated) with Basso Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basso Industry Corp has no effect on the direction of Yieh Hsing i.e., Yieh Hsing and Basso Industry go up and down completely randomly.
Pair Corralation between Yieh Hsing and Basso Industry
Assuming the 90 days trading horizon Yieh Hsing Enterprise is expected to generate 5.03 times more return on investment than Basso Industry. However, Yieh Hsing is 5.03 times more volatile than Basso Industry Corp. It trades about 0.3 of its potential returns per unit of risk. Basso Industry Corp is currently generating about 0.44 per unit of risk. If you would invest 932.00 in Yieh Hsing Enterprise on December 1, 2024 and sell it today you would earn a total of 198.00 from holding Yieh Hsing Enterprise or generate 21.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yieh Hsing Enterprise vs. Basso Industry Corp
Performance |
| Timeline |
| Yieh Hsing Enterprise |
| Basso Industry Corp |
Yieh Hsing and Basso Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yieh Hsing and Basso Industry
The main advantage of trading using opposite Yieh Hsing and Basso Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yieh Hsing position performs unexpectedly, Basso Industry 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 Basso Industry will offset losses from the drop in Basso Industry's long position.| Yieh Hsing vs. Chung Hwa Chemical | Yieh Hsing vs. China Man Made Fiber | Yieh Hsing vs. Sesoda Corp | Yieh Hsing vs. Everlight Chemical Industrial |
| Basso Industry vs. Cheng Shin Rubber | Basso Industry vs. Kung Long Batteries | Basso Industry vs. Pou Chen Corp | Basso Industry vs. China Steel Chemical |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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