Correlation Between First Hotel and YungShin Global
Can any of the company-specific risk be diversified away by investing in both First Hotel and YungShin Global 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 First Hotel and YungShin Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hotel Co and YungShin Global Holding, you can compare the effects of market volatilities on First Hotel and YungShin Global 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 First Hotel with a short position of YungShin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hotel and YungShin Global.
Diversification Opportunities for First Hotel and YungShin Global
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and YungShin is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding First Hotel Co and YungShin Global Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YungShin Global Holding and First Hotel 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 First Hotel Co are associated (or correlated) with YungShin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YungShin Global Holding has no effect on the direction of First Hotel i.e., First Hotel and YungShin Global go up and down completely randomly.
Pair Corralation between First Hotel and YungShin Global
Assuming the 90 days trading horizon First Hotel Co is expected to under-perform the YungShin Global. But the stock apears to be less risky and, when comparing its historical volatility, First Hotel Co is 3.17 times less risky than YungShin Global. The stock trades about -0.02 of its potential returns per unit of risk. The YungShin Global Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,700 in YungShin Global Holding on August 26, 2024 and sell it today you would earn a total of 90.00 from holding YungShin Global Holding or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hotel Co vs. YungShin Global Holding
Performance |
| Timeline |
| First Hotel |
| YungShin Global Holding |
First Hotel and YungShin Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hotel and YungShin Global
The main advantage of trading using opposite First Hotel and YungShin Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hotel position performs unexpectedly, YungShin Global 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 Global will offset losses from the drop in YungShin Global's long position.| First Hotel vs. Taiwan Semiconductor Manufacturing | First Hotel vs. Hon Hai Precision | First Hotel vs. MediaTek | First Hotel vs. Chunghwa Telecom Co |
| YungShin Global vs. GenMont Biotech | YungShin Global vs. Sinphar Pharmaceutical Co | YungShin Global vs. Abnova Taiwan Corp | YungShin Global vs. Wellell |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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