Correlation Between Hsin Kuang and ADLINK Technology
Can any of the company-specific risk be diversified away by investing in both Hsin Kuang and ADLINK Technology 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 ADLINK Technology 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 ADLINK Technology, you can compare the effects of market volatilities on Hsin Kuang and ADLINK Technology 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 ADLINK Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Kuang and ADLINK Technology.
Diversification Opportunities for Hsin Kuang and ADLINK Technology
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hsin and ADLINK is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Kuang Steel and ADLINK Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADLINK Technology 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 ADLINK Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADLINK Technology has no effect on the direction of Hsin Kuang i.e., Hsin Kuang and ADLINK Technology go up and down completely randomly.
Pair Corralation between Hsin Kuang and ADLINK Technology
Assuming the 90 days trading horizon Hsin Kuang Steel is expected to under-perform the ADLINK Technology. But the stock apears to be less risky and, when comparing its historical volatility, Hsin Kuang Steel is 1.18 times less risky than ADLINK Technology. The stock trades about -0.06 of its potential returns per unit of risk. The ADLINK Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 8,090 in ADLINK Technology on September 2, 2024 and sell it today you would lose (740.00) from holding ADLINK Technology or give up 9.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hsin Kuang Steel vs. ADLINK Technology
Performance |
| Timeline |
| Hsin Kuang Steel |
| ADLINK Technology |
Hsin Kuang and ADLINK Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsin Kuang and ADLINK Technology
The main advantage of trading using opposite Hsin Kuang and ADLINK Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Kuang position performs unexpectedly, ADLINK Technology 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 ADLINK Technology will offset losses from the drop in ADLINK Technology'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 |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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