Correlation Between Strong H and Newretail
Can any of the company-specific risk be diversified away by investing in both Strong H and Newretail 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 Strong H and Newretail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strong H Machinery and Newretail Co, you can compare the effects of market volatilities on Strong H and Newretail 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 Strong H with a short position of Newretail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strong H and Newretail.
Diversification Opportunities for Strong H and Newretail
Very weak diversification
The 3 months correlation between Strong and Newretail is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Strong H Machinery and Newretail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newretail and Strong H 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 Strong H Machinery are associated (or correlated) with Newretail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newretail has no effect on the direction of Strong H i.e., Strong H and Newretail go up and down completely randomly.
Pair Corralation between Strong H and Newretail
Assuming the 90 days trading horizon Strong H Machinery is expected to under-perform the Newretail. But the stock apears to be less risky and, when comparing its historical volatility, Strong H Machinery is 5.14 times less risky than Newretail. The stock trades about 0.0 of its potential returns per unit of risk. The Newretail Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,180 in Newretail Co on October 16, 2024 and sell it today you would earn a total of 440.00 from holding Newretail Co or generate 20.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strong H Machinery vs. Newretail Co
Performance |
| Timeline |
| Strong H Machinery |
| Newretail |
Strong H and Newretail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strong H and Newretail
The main advantage of trading using opposite Strong H and Newretail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strong H position performs unexpectedly, Newretail 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 Newretail will offset losses from the drop in Newretail's long position.| Strong H vs. Hiwin Technologies Corp | Strong H vs. Brighton Best International Taiwan | Strong H vs. San Shing Fastech | Strong H vs. QST International |
| Newretail vs. Strong H Machinery | Newretail vs. Kindom Construction Corp | Newretail vs. Microelectronics Technology | Newretail vs. Advanced Wireless Semiconductor |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |