Correlation Between Double Bond and HOYA Resort
Can any of the company-specific risk be diversified away by investing in both Double Bond and HOYA Resort 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 Double Bond and HOYA Resort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Double Bond Chemical and HOYA Resort Hotel, you can compare the effects of market volatilities on Double Bond and HOYA Resort 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 Double Bond with a short position of HOYA Resort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Double Bond and HOYA Resort.
Diversification Opportunities for Double Bond and HOYA Resort
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Double and HOYA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Double Bond Chemical and HOYA Resort Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA Resort Hotel and Double Bond 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 Double Bond Chemical are associated (or correlated) with HOYA Resort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA Resort Hotel has no effect on the direction of Double Bond i.e., Double Bond and HOYA Resort go up and down completely randomly.
Pair Corralation between Double Bond and HOYA Resort
Assuming the 90 days trading horizon Double Bond Chemical is expected to generate 0.93 times more return on investment than HOYA Resort. However, Double Bond Chemical is 1.07 times less risky than HOYA Resort. It trades about -0.15 of its potential returns per unit of risk. HOYA Resort Hotel is currently generating about -0.33 per unit of risk. If you would invest 4,550 in Double Bond Chemical on September 1, 2024 and sell it today you would lose (190.00) from holding Double Bond Chemical or give up 4.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Double Bond Chemical vs. HOYA Resort Hotel
Performance |
| Timeline |
| Double Bond Chemical |
| HOYA Resort Hotel |
Double Bond and HOYA Resort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Double Bond and HOYA Resort
The main advantage of trading using opposite Double Bond and HOYA Resort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Double Bond position performs unexpectedly, HOYA Resort 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 HOYA Resort will offset losses from the drop in HOYA Resort's long position.| Double Bond vs. Delta Electronics | Double Bond vs. China Steel Chemical | Double Bond vs. Hota Industrial Mfg |
| HOYA Resort vs. AVerMedia Technologies | HOYA Resort vs. Cayenne Entertainment Technology | HOYA Resort vs. Sports Gear Co | HOYA Resort vs. Provision Information CoLtd |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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