Correlation Between Roo Hsing and Excellence Optoelectronic
Can any of the company-specific risk be diversified away by investing in both Roo Hsing and Excellence Optoelectronic 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 Roo Hsing and Excellence Optoelectronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roo Hsing Co and Excellence Optoelectronic, you can compare the effects of market volatilities on Roo Hsing and Excellence Optoelectronic 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 Roo Hsing with a short position of Excellence Optoelectronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roo Hsing and Excellence Optoelectronic.
Diversification Opportunities for Roo Hsing and Excellence Optoelectronic
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Roo and Excellence is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Roo Hsing Co and Excellence Optoelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellence Optoelectronic and Roo Hsing 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 Roo Hsing Co are associated (or correlated) with Excellence Optoelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellence Optoelectronic has no effect on the direction of Roo Hsing i.e., Roo Hsing and Excellence Optoelectronic go up and down completely randomly.
Pair Corralation between Roo Hsing and Excellence Optoelectronic
Assuming the 90 days trading horizon Roo Hsing Co is expected to under-perform the Excellence Optoelectronic. But the stock apears to be less risky and, when comparing its historical volatility, Roo Hsing Co is 2.65 times less risky than Excellence Optoelectronic. The stock trades about -0.06 of its potential returns per unit of risk. The Excellence Optoelectronic is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,615 in Excellence Optoelectronic on September 3, 2024 and sell it today you would earn a total of 325.00 from holding Excellence Optoelectronic or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roo Hsing Co vs. Excellence Optoelectronic
Performance |
| Timeline |
| Roo Hsing |
| Excellence Optoelectronic |
Roo Hsing and Excellence Optoelectronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roo Hsing and Excellence Optoelectronic
The main advantage of trading using opposite Roo Hsing and Excellence Optoelectronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roo Hsing position performs unexpectedly, Excellence Optoelectronic 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 Excellence Optoelectronic will offset losses from the drop in Excellence Optoelectronic's long position.| Roo Hsing vs. Excellence Optoelectronic | Roo Hsing vs. Bright Led Electronics | Roo Hsing vs. C Media Electronics | Roo Hsing vs. Hunya Foods Co |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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