Correlation Between Hsinjing Holding and Motech Industries
Can any of the company-specific risk be diversified away by investing in both Hsinjing Holding and Motech Industries 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 Hsinjing Holding and Motech Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hsinjing Holding Co and Motech Industries Co, you can compare the effects of market volatilities on Hsinjing Holding and Motech Industries 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 Hsinjing Holding with a short position of Motech Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsinjing Holding and Motech Industries.
Diversification Opportunities for Hsinjing Holding and Motech Industries
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hsinjing and Motech is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hsinjing Holding Co and Motech Industries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motech Industries and Hsinjing Holding 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 Hsinjing Holding Co are associated (or correlated) with Motech Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motech Industries has no effect on the direction of Hsinjing Holding i.e., Hsinjing Holding and Motech Industries go up and down completely randomly.
Pair Corralation between Hsinjing Holding and Motech Industries
Assuming the 90 days trading horizon Hsinjing Holding Co is expected to generate 0.71 times more return on investment than Motech Industries. However, Hsinjing Holding Co is 1.41 times less risky than Motech Industries. It trades about 0.01 of its potential returns per unit of risk. Motech Industries Co is currently generating about -0.11 per unit of risk. If you would invest 2,280 in Hsinjing Holding Co on October 26, 2024 and sell it today you would lose (5.00) from holding Hsinjing Holding Co or give up 0.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hsinjing Holding Co vs. Motech Industries Co
Performance |
| Timeline |
| Hsinjing Holding |
| Motech Industries |
Hsinjing Holding and Motech Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsinjing Holding and Motech Industries
The main advantage of trading using opposite Hsinjing Holding and Motech Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsinjing Holding position performs unexpectedly, Motech Industries 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 Motech Industries will offset losses from the drop in Motech Industries' long position.| Hsinjing Holding vs. International CSRC Investment | Hsinjing Holding vs. Farglory FTZ Investment | Hsinjing Holding vs. Chicony Power Technology | Hsinjing Holding vs. Posiflex Technology |
| Motech Industries vs. United Renewable Energy | Motech Industries vs. Sino American Silicon Products | Motech Industries vs. Wafer Works | Motech Industries vs. Gigasolar Materials |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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