Correlation Between Hsinli Chemical and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both Hsinli Chemical and Tehmag Foods 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 Hsinli Chemical and Tehmag Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hsinli Chemical Industrial and Tehmag Foods, you can compare the effects of market volatilities on Hsinli Chemical and Tehmag Foods 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 Hsinli Chemical with a short position of Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsinli Chemical and Tehmag Foods.
Diversification Opportunities for Hsinli Chemical and Tehmag Foods
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hsinli and Tehmag is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hsinli Chemical Industrial and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods and Hsinli Chemical 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 Hsinli Chemical Industrial are associated (or correlated) with Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of Hsinli Chemical i.e., Hsinli Chemical and Tehmag Foods go up and down completely randomly.
Pair Corralation between Hsinli Chemical and Tehmag Foods
Assuming the 90 days trading horizon Hsinli Chemical Industrial is expected to under-perform the Tehmag Foods. In addition to that, Hsinli Chemical is 2.51 times more volatile than Tehmag Foods. It trades about -0.4 of its total potential returns per unit of risk. Tehmag Foods is currently generating about 0.34 per unit of volatility. If you would invest 31,000 in Tehmag Foods on November 2, 2024 and sell it today you would earn a total of 800.00 from holding Tehmag Foods or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hsinli Chemical Industrial vs. Tehmag Foods
Performance |
| Timeline |
| Hsinli Chemical Indu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Tehmag Foods |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Hsinli Chemical and Tehmag Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsinli Chemical and Tehmag Foods
The main advantage of trading using opposite Hsinli Chemical and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsinli Chemical position performs unexpectedly, Tehmag Foods 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.The idea behind Hsinli Chemical Industrial and Tehmag Foods 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.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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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