Correlation Between Alchip Technologies and Huang Hsiang
Can any of the company-specific risk be diversified away by investing in both Alchip Technologies 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 Alchip Technologies and Huang Hsiang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alchip Technologies and Huang Hsiang Construction, you can compare the effects of market volatilities on Alchip Technologies 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 Alchip Technologies with a short position of Huang Hsiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alchip Technologies and Huang Hsiang.
Diversification Opportunities for Alchip Technologies and Huang Hsiang
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alchip and Huang is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alchip Technologies 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 Alchip Technologies 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 Alchip Technologies 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 Alchip Technologies i.e., Alchip Technologies and Huang Hsiang go up and down completely randomly.
Pair Corralation between Alchip Technologies and Huang Hsiang
Assuming the 90 days trading horizon Alchip Technologies is expected to generate 4.99 times less return on investment than Huang Hsiang. In addition to that, Alchip Technologies is 1.13 times more volatile than Huang Hsiang Construction. It trades about 0.07 of its total potential returns per unit of risk. Huang Hsiang Construction is currently generating about 0.4 per unit of volatility. If you would invest 6,060 in Huang Hsiang Construction on September 4, 2024 and sell it today you would earn a total of 1,560 from holding Huang Hsiang Construction or generate 25.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alchip Technologies vs. Huang Hsiang Construction
Performance |
| Timeline |
| Alchip Technologies |
| Huang Hsiang Construction |
Alchip Technologies and Huang Hsiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alchip Technologies and Huang Hsiang
The main advantage of trading using opposite Alchip Technologies and Huang Hsiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alchip Technologies 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 Alchip Technologies 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.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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