Correlation Between Hung Sheng and XAC Automation
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and XAC Automation 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 XAC Automation 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 XAC Automation, you can compare the effects of market volatilities on Hung Sheng and XAC Automation 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 XAC Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and XAC Automation.
Diversification Opportunities for Hung Sheng and XAC Automation
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hung and XAC is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and XAC Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAC Automation 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 XAC Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAC Automation has no effect on the direction of Hung Sheng i.e., Hung Sheng and XAC Automation go up and down completely randomly.
Pair Corralation between Hung Sheng and XAC Automation
Assuming the 90 days trading horizon Hung Sheng Construction is expected to generate 0.64 times more return on investment than XAC Automation. However, Hung Sheng Construction is 1.56 times less risky than XAC Automation. It trades about 0.14 of its potential returns per unit of risk. XAC Automation is currently generating about 0.05 per unit of risk. If you would invest 2,565 in Hung Sheng Construction on September 4, 2024 and sell it today you would earn a total of 125.00 from holding Hung Sheng Construction or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. XAC Automation
Performance |
| Timeline |
| Hung Sheng Construction |
| XAC Automation |
Hung Sheng and XAC Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and XAC Automation
The main advantage of trading using opposite Hung Sheng and XAC Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, XAC Automation 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 XAC Automation will offset losses from the drop in XAC Automation's long position.| Hung Sheng vs. Huaku Development Co | Hung Sheng vs. Ruentex Development Co | Hung Sheng vs. Taiwan Cement Corp | Hung Sheng vs. Symtek Automation Asia |
| XAC Automation vs. Taiwan Steel Union | XAC Automation vs. China Steel Corp | XAC Automation vs. Yieh United Steel | XAC Automation vs. Trade Van Information Services |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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