Correlation Between Hsin Kuang and Yieh Hsing
Can any of the company-specific risk be diversified away by investing in both Hsin Kuang and Yieh Hsing 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 Yieh Hsing 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 Yieh Hsing Enterprise, you can compare the effects of market volatilities on Hsin Kuang and Yieh Hsing 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 Yieh Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Kuang and Yieh Hsing.
Diversification Opportunities for Hsin Kuang and Yieh Hsing
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hsin and Yieh is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Kuang Steel and Yieh Hsing Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yieh Hsing Enterprise 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 Yieh Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yieh Hsing Enterprise has no effect on the direction of Hsin Kuang i.e., Hsin Kuang and Yieh Hsing go up and down completely randomly.
Pair Corralation between Hsin Kuang and Yieh Hsing
Assuming the 90 days trading horizon Hsin Kuang Steel is expected to generate 0.94 times more return on investment than Yieh Hsing. However, Hsin Kuang Steel is 1.06 times less risky than Yieh Hsing. It trades about 0.03 of its potential returns per unit of risk. Yieh Hsing Enterprise is currently generating about 0.0 per unit of risk. If you would invest 4,170 in Hsin Kuang Steel on September 3, 2024 and sell it today you would earn a total of 785.00 from holding Hsin Kuang Steel or generate 18.82% 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. Yieh Hsing Enterprise
Performance |
| Timeline |
| Hsin Kuang Steel |
| Yieh Hsing Enterprise |
Hsin Kuang and Yieh Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsin Kuang and Yieh Hsing
The main advantage of trading using opposite Hsin Kuang and Yieh Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Kuang position performs unexpectedly, Yieh Hsing 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 Yieh Hsing will offset losses from the drop in Yieh Hsing's long position.The idea behind Hsin Kuang Steel and Yieh Hsing Enterprise pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Yieh Hsing vs. Chung Hung Steel | Yieh Hsing vs. Yieh Phui Enterprise | Yieh Hsing vs. Hsin Kuang Steel | Yieh Hsing vs. Tung Ho Steel |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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