Correlation Between First Hotel and Sinher Technology
Can any of the company-specific risk be diversified away by investing in both First Hotel and Sinher Technology 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 Sinher Technology 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 Sinher Technology, you can compare the effects of market volatilities on First Hotel and Sinher Technology 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 Sinher Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hotel and Sinher Technology.
Diversification Opportunities for First Hotel and Sinher Technology
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Sinher is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding First Hotel Co and Sinher Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinher Technology 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 Sinher Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinher Technology has no effect on the direction of First Hotel i.e., First Hotel and Sinher Technology go up and down completely randomly.
Pair Corralation between First Hotel and Sinher Technology
Assuming the 90 days trading horizon First Hotel Co is expected to under-perform the Sinher Technology. But the stock apears to be less risky and, when comparing its historical volatility, First Hotel Co is 1.43 times less risky than Sinher Technology. The stock trades about -0.12 of its potential returns per unit of risk. The Sinher Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,520 in Sinher Technology on August 26, 2024 and sell it today you would lose (120.00) from holding Sinher Technology or give up 3.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hotel Co vs. Sinher Technology
Performance |
| Timeline |
| First Hotel |
| Sinher Technology |
First Hotel and Sinher Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hotel and Sinher Technology
The main advantage of trading using opposite First Hotel and Sinher Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hotel position performs unexpectedly, Sinher Technology 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 Sinher Technology will offset losses from the drop in Sinher Technology'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 |
| Sinher Technology vs. Hsing Ta Cement | Sinher Technology vs. Capital Futures Corp | Sinher Technology vs. First Insurance Co | Sinher Technology vs. Yem Chio 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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