Correlation Between Hsin Kuang and Holtek Semiconductor
Can any of the company-specific risk be diversified away by investing in both Hsin Kuang and Holtek Semiconductor 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 Holtek Semiconductor 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 Holtek Semiconductor, you can compare the effects of market volatilities on Hsin Kuang and Holtek Semiconductor 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 Holtek Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Kuang and Holtek Semiconductor.
Diversification Opportunities for Hsin Kuang and Holtek Semiconductor
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hsin and Holtek is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Kuang Steel and Holtek Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holtek Semiconductor 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 Holtek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holtek Semiconductor has no effect on the direction of Hsin Kuang i.e., Hsin Kuang and Holtek Semiconductor go up and down completely randomly.
Pair Corralation between Hsin Kuang and Holtek Semiconductor
Assuming the 90 days trading horizon Hsin Kuang Steel is expected to generate 0.37 times more return on investment than Holtek Semiconductor. However, Hsin Kuang Steel is 2.7 times less risky than Holtek Semiconductor. It trades about 0.09 of its potential returns per unit of risk. Holtek Semiconductor is currently generating about -0.01 per unit of risk. If you would invest 4,520 in Hsin Kuang Steel on October 20, 2024 and sell it today you would earn a total of 110.00 from holding Hsin Kuang Steel or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hsin Kuang Steel vs. Holtek Semiconductor
Performance |
| Timeline |
| Hsin Kuang Steel |
| Holtek Semiconductor |
Hsin Kuang and Holtek Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsin Kuang and Holtek Semiconductor
The main advantage of trading using opposite Hsin Kuang and Holtek Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Kuang position performs unexpectedly, Holtek Semiconductor 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 Holtek Semiconductor will offset losses from the drop in Holtek Semiconductor'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 |
| Holtek Semiconductor vs. Novatek Microelectronics Corp | Holtek Semiconductor vs. Realtek Semiconductor Corp | Holtek Semiconductor vs. Nuvoton Technology Corp | Holtek Semiconductor vs. Global Unichip 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 Stocks Directory module to find actively traded stocks across global markets.
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