Correlation Between Hsin Kuang and S Tech
Can any of the company-specific risk be diversified away by investing in both Hsin Kuang and S Tech 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 Hsin Kuang and S Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hsin Kuang Steel and S Tech Corp, you can compare the effects of market volatilities on Hsin Kuang and S Tech 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 Hsin Kuang with a short position of S Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Kuang and S Tech.
Diversification Opportunities for Hsin Kuang and S Tech
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hsin and 1584 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Kuang Steel and S Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S Tech Corp and Hsin Kuang 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 Hsin Kuang Steel are associated (or correlated) with S Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S Tech Corp has no effect on the direction of Hsin Kuang i.e., Hsin Kuang and S Tech go up and down completely randomly.
Pair Corralation between Hsin Kuang and S Tech
Assuming the 90 days trading horizon Hsin Kuang Steel is expected to generate 0.88 times more return on investment than S Tech. However, Hsin Kuang Steel is 1.13 times less risky than S Tech. It trades about 0.02 of its potential returns per unit of risk. S Tech Corp is currently generating about 0.01 per unit of risk. If you would invest 4,550 in Hsin Kuang Steel on November 30, 2024 and sell it today you would earn a total of 690.00 from holding Hsin Kuang Steel or generate 15.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hsin Kuang Steel vs. S Tech Corp
Performance |
| Timeline |
| Hsin Kuang Steel |
| S Tech Corp |
Hsin Kuang and S Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsin Kuang and S Tech
The main advantage of trading using opposite Hsin Kuang and S Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Kuang position performs unexpectedly, S Tech 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 S Tech will offset losses from the drop in S Tech's long position.| Hsin Kuang vs. Chung Hung Steel | Hsin Kuang vs. Tung Ho Steel | Hsin Kuang vs. Ta Chen Stainless | Hsin Kuang vs. Feng Hsin Steel |
| S Tech vs. Simple Mart Retail | S Tech vs. Amulaire Thermal Technology | S Tech vs. Air Asia Co | S Tech vs. Asia Metal Industries |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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