Correlation Between Hsin Kuang and Yuan High
Can any of the company-specific risk be diversified away by investing in both Hsin Kuang and Yuan High 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 Yuan High 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 Yuan High Tech Development, you can compare the effects of market volatilities on Hsin Kuang and Yuan High 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 Yuan High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Kuang and Yuan High.
Diversification Opportunities for Hsin Kuang and Yuan High
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hsin and Yuan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Kuang Steel and Yuan High Tech Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuan High Tech 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 Yuan High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuan High Tech has no effect on the direction of Hsin Kuang i.e., Hsin Kuang and Yuan High go up and down completely randomly.
Pair Corralation between Hsin Kuang and Yuan High
Assuming the 90 days trading horizon Hsin Kuang Steel is expected to generate 0.27 times more return on investment than Yuan High. However, Hsin Kuang Steel is 3.71 times less risky than Yuan High. It trades about 0.09 of its potential returns per unit of risk. Yuan High Tech Development is currently generating about -0.13 per unit of risk. If you would invest 4,630 in Hsin Kuang Steel on October 31, 2024 and sell it today you would earn a total of 90.00 from holding Hsin Kuang Steel or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hsin Kuang Steel vs. Yuan High Tech Development
Performance |
| Timeline |
| Hsin Kuang Steel |
| Yuan High Tech |
Hsin Kuang and Yuan High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsin Kuang and Yuan High
The main advantage of trading using opposite Hsin Kuang and Yuan High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Kuang position performs unexpectedly, Yuan High 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 Yuan High will offset losses from the drop in Yuan High's long position.| Hsin Kuang vs. Nan Ya Plastics | Hsin Kuang vs. Formosa Chemicals Fibre | Hsin Kuang vs. Formosa Petrochemical Corp | Hsin Kuang vs. Cathay Financial Holding |
| Yuan High vs. First Hotel Co | Yuan High vs. WIN Semiconductors | Yuan High vs. Chinese Maritime Transport | Yuan High vs. Sunspring Metal 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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