Correlation Between Humasis and Dongyang

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Can any of the company-specific risk be diversified away by investing in both Humasis and Dongyang 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 Humasis and Dongyang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humasis Co and Dongyang EP, you can compare the effects of market volatilities on Humasis and Dongyang 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 Humasis with a short position of Dongyang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humasis and Dongyang.

Diversification Opportunities for Humasis and Dongyang

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Humasis and Dongyang is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Humasis Co and Dongyang EP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongyang EP and Humasis 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 Humasis Co are associated (or correlated) with Dongyang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongyang EP has no effect on the direction of Humasis i.e., Humasis and Dongyang go up and down completely randomly.

Pair Corralation between Humasis and Dongyang

Assuming the 90 days trading horizon Humasis Co is expected to generate 5.07 times more return on investment than Dongyang. However, Humasis is 5.07 times more volatile than Dongyang EP. It trades about 0.08 of its potential returns per unit of risk. Dongyang EP is currently generating about 0.11 per unit of risk. If you would invest  168,400  in Humasis Co on October 24, 2024 and sell it today you would earn a total of  8,700  from holding Humasis Co or generate 5.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Humasis Co  vs.  Dongyang EP

 Performance 
       Timeline  
Humasis 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Humasis Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Humasis sustained solid returns over the last few months and may actually be approaching a breakup point.
Dongyang EP 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dongyang EP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Dongyang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Humasis and Dongyang Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Humasis and Dongyang

The main advantage of trading using opposite Humasis and Dongyang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humasis position performs unexpectedly, Dongyang 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 Dongyang will offset losses from the drop in Dongyang's long position.
The idea behind Humasis Co and Dongyang EP 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.
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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