Correlation Between Huaku Development and Yungshin Construction
Can any of the company-specific risk be diversified away by investing in both Huaku Development and Yungshin Construction 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 Yungshin Construction 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 Yungshin Construction Development, you can compare the effects of market volatilities on Huaku Development and Yungshin Construction 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 Yungshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaku Development and Yungshin Construction.
Diversification Opportunities for Huaku Development and Yungshin Construction
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Huaku and Yungshin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Huaku Development Co and Yungshin Construction Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yungshin 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 Yungshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yungshin Construction has no effect on the direction of Huaku Development i.e., Huaku Development and Yungshin Construction go up and down completely randomly.
Pair Corralation between Huaku Development and Yungshin Construction
Assuming the 90 days trading horizon Huaku Development Co is expected to generate 0.79 times more return on investment than Yungshin Construction. However, Huaku Development Co is 1.26 times less risky than Yungshin Construction. It trades about 0.09 of its potential returns per unit of risk. Yungshin Construction Development is currently generating about -0.27 per unit of risk. If you would invest 11,750 in Huaku Development Co on September 3, 2024 and sell it today you would earn a total of 450.00 from holding Huaku Development Co or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaku Development Co vs. Yungshin Construction Developm
Performance |
| Timeline |
| Huaku Development |
| Yungshin Construction |
Huaku Development and Yungshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaku Development and Yungshin Construction
The main advantage of trading using opposite Huaku Development and Yungshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaku Development position performs unexpectedly, Yungshin Construction 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 Yungshin Construction will offset losses from the drop in Yungshin Construction's long position.| Huaku Development vs. Chong Hong Construction | Huaku Development vs. Highwealth Construction Corp | Huaku Development vs. Fubon Financial Holding | Huaku Development vs. CTBC Financial Holding |
| Yungshin Construction vs. Huaku Development Co | Yungshin Construction vs. Ruentex Development Co | Yungshin Construction vs. Taiwan Cement Corp | Yungshin Construction vs. Symtek Automation Asia |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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