Correlation Between Huaku Development and Huang Hsiang
Can any of the company-specific risk be diversified away by investing in both Huaku Development and Huang Hsiang 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 Huaku Development and Huang Hsiang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huaku Development Co and Huang Hsiang Construction, you can compare the effects of market volatilities on Huaku Development and Huang Hsiang 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 Huaku Development with a short position of Huang Hsiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaku Development and Huang Hsiang.
Diversification Opportunities for Huaku Development and Huang Hsiang
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Huaku and Huang is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Huaku Development Co and Huang Hsiang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huang Hsiang Construction and Huaku Development 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 Huaku Development Co are associated (or correlated) with Huang Hsiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huang Hsiang Construction has no effect on the direction of Huaku Development i.e., Huaku Development and Huang Hsiang go up and down completely randomly.
Pair Corralation between Huaku Development and Huang Hsiang
Assuming the 90 days trading horizon Huaku Development Co is expected to under-perform the Huang Hsiang. In addition to that, Huaku Development is 1.73 times more volatile than Huang Hsiang Construction. It trades about -0.21 of its total potential returns per unit of risk. Huang Hsiang Construction is currently generating about -0.07 per unit of volatility. If you would invest 6,370 in Huang Hsiang Construction on November 2, 2024 and sell it today you would lose (80.00) from holding Huang Hsiang Construction or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaku Development Co vs. Huang Hsiang Construction
Performance |
| Timeline |
| Huaku Development |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Huang Hsiang Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Huaku Development and Huang Hsiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaku Development and Huang Hsiang
The main advantage of trading using opposite Huaku Development and Huang Hsiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaku Development position performs unexpectedly, Huang Hsiang 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 Huang Hsiang will offset losses from the drop in Huang Hsiang's long position.The idea behind Huaku Development Co and Huang Hsiang Construction 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |