Correlation Between Hsin Kuang and Swancor Holding
Can any of the company-specific risk be diversified away by investing in both Hsin Kuang and Swancor Holding 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 Swancor Holding 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 Swancor Holding Co, you can compare the effects of market volatilities on Hsin Kuang and Swancor Holding 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 Swancor Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Kuang and Swancor Holding.
Diversification Opportunities for Hsin Kuang and Swancor Holding
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hsin and Swancor is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Kuang Steel and Swancor Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swancor Holding 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 Swancor Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swancor Holding has no effect on the direction of Hsin Kuang i.e., Hsin Kuang and Swancor Holding go up and down completely randomly.
Pair Corralation between Hsin Kuang and Swancor Holding
Assuming the 90 days trading horizon Hsin Kuang Steel is expected to generate 0.66 times more return on investment than Swancor Holding. However, Hsin Kuang Steel is 1.51 times less risky than Swancor Holding. It trades about -0.06 of its potential returns per unit of risk. Swancor Holding Co is currently generating about -0.07 per unit of risk. If you would invest 6,080 in Hsin Kuang Steel on September 1, 2024 and sell it today you would lose (1,125) from holding Hsin Kuang Steel or give up 18.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.22% |
| Values | Daily Returns |
Hsin Kuang Steel vs. Swancor Holding Co
Performance |
| Timeline |
| Hsin Kuang Steel |
| Swancor Holding |
Hsin Kuang and Swancor Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsin Kuang and Swancor Holding
The main advantage of trading using opposite Hsin Kuang and Swancor Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Kuang position performs unexpectedly, Swancor Holding 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 Swancor Holding will offset losses from the drop in Swancor Holding'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 |
| Swancor Holding vs. Century Iron And | Swancor Holding vs. Yeong Guan Energy | Swancor Holding vs. Chung Hsin Electric Machinery | Swancor Holding vs. Unimicron Technology Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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