Correlation Between Huang Hsiang and Yuan High
Can any of the company-specific risk be diversified away by investing in both Huang Hsiang and Yuan High 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 Yuan High 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 Yuan High Tech Development, you can compare the effects of market volatilities on Huang Hsiang and Yuan High 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 Yuan High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huang Hsiang and Yuan High.
Diversification Opportunities for Huang Hsiang and Yuan High
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Huang and Yuan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Huang Hsiang Construction and Yuan High Tech Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuan High Tech 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 Yuan High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuan High Tech has no effect on the direction of Huang Hsiang i.e., Huang Hsiang and Yuan High go up and down completely randomly.
Pair Corralation between Huang Hsiang and Yuan High
Assuming the 90 days trading horizon Huang Hsiang Construction is expected to generate 0.65 times more return on investment than Yuan High. However, Huang Hsiang Construction is 1.53 times less risky than Yuan High. It trades about -0.05 of its potential returns per unit of risk. Yuan High Tech Development is currently generating about -0.04 per unit of risk. If you would invest 7,100 in Huang Hsiang Construction on December 16, 2024 and sell it today you would lose (220.00) from holding Huang Hsiang Construction or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huang Hsiang Construction vs. Yuan High Tech Development
Performance |
| Timeline |
| Huang Hsiang Construction |
| Yuan High Tech |
Huang Hsiang and Yuan High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huang Hsiang and Yuan High
The main advantage of trading using opposite Huang Hsiang and Yuan High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huang Hsiang position performs unexpectedly, Yuan High 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 Yuan High will offset losses from the drop in Yuan High's long position.| Huang Hsiang vs. Highwealth Construction Corp | ||
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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