Correlation Between Hung Sheng and Tainan Spinning
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Tainan Spinning 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 Hung Sheng and Tainan Spinning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hung Sheng Construction and Tainan Spinning Co, you can compare the effects of market volatilities on Hung Sheng and Tainan Spinning 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 Hung Sheng with a short position of Tainan Spinning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Tainan Spinning.
Diversification Opportunities for Hung Sheng and Tainan Spinning
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hung and Tainan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Tainan Spinning Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainan Spinning and Hung Sheng 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 Hung Sheng Construction are associated (or correlated) with Tainan Spinning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainan Spinning has no effect on the direction of Hung Sheng i.e., Hung Sheng and Tainan Spinning go up and down completely randomly.
Pair Corralation between Hung Sheng and Tainan Spinning
Assuming the 90 days trading horizon Hung Sheng Construction is expected to generate 1.18 times more return on investment than Tainan Spinning. However, Hung Sheng is 1.18 times more volatile than Tainan Spinning Co. It trades about 0.0 of its potential returns per unit of risk. Tainan Spinning Co is currently generating about -0.08 per unit of risk. If you would invest 2,750 in Hung Sheng Construction on September 1, 2024 and sell it today you would lose (55.00) from holding Hung Sheng Construction or give up 2.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Hung Sheng Construction vs. Tainan Spinning Co
Performance |
| Timeline |
| Hung Sheng Construction |
| Tainan Spinning |
Hung Sheng and Tainan Spinning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Tainan Spinning
The main advantage of trading using opposite Hung Sheng and Tainan Spinning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Tainan Spinning 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 Tainan Spinning will offset losses from the drop in Tainan Spinning's long position.| Hung Sheng vs. Ruentex Development Co | Hung Sheng vs. CTCI Corp | Hung Sheng vs. Information Technology Total | Hung Sheng vs. Ennoconn Corp |
| Tainan Spinning vs. Lealea Enterprise Co | Tainan Spinning vs. China Petrochemical Development | Tainan Spinning vs. Li Peng Enterprise | Tainan Spinning vs. Oriental Union Chemical |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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