Correlation Between Huang Hsiang and San Shing
Can any of the company-specific risk be diversified away by investing in both Huang Hsiang and San Shing 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 Huang Hsiang and San Shing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huang Hsiang Construction and San Shing Fastech, you can compare the effects of market volatilities on Huang Hsiang and San Shing 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 Huang Hsiang with a short position of San Shing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huang Hsiang and San Shing.
Diversification Opportunities for Huang Hsiang and San Shing
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Huang and San is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Huang Hsiang Construction and San Shing Fastech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Shing Fastech and Huang Hsiang 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 Huang Hsiang Construction are associated (or correlated) with San Shing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Shing Fastech has no effect on the direction of Huang Hsiang i.e., Huang Hsiang and San Shing go up and down completely randomly.
Pair Corralation between Huang Hsiang and San Shing
Assuming the 90 days trading horizon Huang Hsiang Construction is expected to generate 4.18 times more return on investment than San Shing. However, Huang Hsiang is 4.18 times more volatile than San Shing Fastech. It trades about 0.15 of its potential returns per unit of risk. San Shing Fastech is currently generating about -0.05 per unit of risk. If you would invest 6,030 in Huang Hsiang Construction on September 3, 2024 and sell it today you would earn a total of 1,560 from holding Huang Hsiang Construction or generate 25.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huang Hsiang Construction vs. San Shing Fastech
Performance |
| Timeline |
| Huang Hsiang Construction |
| San Shing Fastech |
Huang Hsiang and San Shing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huang Hsiang and San Shing
The main advantage of trading using opposite Huang Hsiang and San Shing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huang Hsiang position performs unexpectedly, San Shing 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 San Shing will offset losses from the drop in San Shing's long position.| Huang Hsiang vs. Huaku Development Co | Huang Hsiang vs. Ruentex Development Co | Huang Hsiang vs. Taiwan Cement Corp | Huang Hsiang vs. Symtek Automation Asia |
| San Shing vs. Topco Scientific Co | San Shing vs. WPG Holdings | San Shing vs. Charoen Pokphand Enterprise | San Shing vs. Merida Industry Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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