Correlation Between Hengyuan Refining and Tomei Consolidated
Can any of the company-specific risk be diversified away by investing in both Hengyuan Refining and Tomei Consolidated 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 Hengyuan Refining and Tomei Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hengyuan Refining and Tomei Consolidated Bhd, you can compare the effects of market volatilities on Hengyuan Refining and Tomei Consolidated 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 Hengyuan Refining with a short position of Tomei Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengyuan Refining and Tomei Consolidated.
Diversification Opportunities for Hengyuan Refining and Tomei Consolidated
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hengyuan and Tomei is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hengyuan Refining and Tomei Consolidated Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomei Consolidated Bhd and Hengyuan Refining 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 Hengyuan Refining are associated (or correlated) with Tomei Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomei Consolidated Bhd has no effect on the direction of Hengyuan Refining i.e., Hengyuan Refining and Tomei Consolidated go up and down completely randomly.
Pair Corralation between Hengyuan Refining and Tomei Consolidated
Assuming the 90 days trading horizon Hengyuan Refining is expected to under-perform the Tomei Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, Hengyuan Refining is 1.06 times less risky than Tomei Consolidated. The stock trades about -0.5 of its potential returns per unit of risk. The Tomei Consolidated Bhd is currently generating about -0.34 of returns per unit of risk over similar time horizon. If you would invest 168.00 in Tomei Consolidated Bhd on September 2, 2024 and sell it today you would lose (23.00) from holding Tomei Consolidated Bhd or give up 13.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hengyuan Refining vs. Tomei Consolidated Bhd
Performance |
| Timeline |
| Hengyuan Refining |
| Tomei Consolidated Bhd |
Hengyuan Refining and Tomei Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hengyuan Refining and Tomei Consolidated
The main advantage of trading using opposite Hengyuan Refining and Tomei Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengyuan Refining position performs unexpectedly, Tomei Consolidated 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 Tomei Consolidated will offset losses from the drop in Tomei Consolidated's long position.| Hengyuan Refining vs. Senheng New Retail | Hengyuan Refining vs. Binasat Communications Bhd | Hengyuan Refining vs. Farm Price Holdings | Hengyuan Refining vs. SSF Home Group |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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