Correlation Between Baotek Industrial and Hi Lai
Can any of the company-specific risk be diversified away by investing in both Baotek Industrial and Hi Lai 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 Baotek Industrial and Hi Lai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baotek Industrial Materials and Hi Lai Foods Co, you can compare the effects of market volatilities on Baotek Industrial and Hi Lai 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 Baotek Industrial with a short position of Hi Lai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baotek Industrial and Hi Lai.
Diversification Opportunities for Baotek Industrial and Hi Lai
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baotek and 1268 is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Baotek Industrial Materials and Hi Lai Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Lai Foods and Baotek Industrial 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 Baotek Industrial Materials are associated (or correlated) with Hi Lai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Lai Foods has no effect on the direction of Baotek Industrial i.e., Baotek Industrial and Hi Lai go up and down completely randomly.
Pair Corralation between Baotek Industrial and Hi Lai
Assuming the 90 days trading horizon Baotek Industrial Materials is expected to generate 2.18 times more return on investment than Hi Lai. However, Baotek Industrial is 2.18 times more volatile than Hi Lai Foods Co. It trades about 0.03 of its potential returns per unit of risk. Hi Lai Foods Co is currently generating about 0.02 per unit of risk. If you would invest 4,040 in Baotek Industrial Materials on August 29, 2024 and sell it today you would earn a total of 560.00 from holding Baotek Industrial Materials or generate 13.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baotek Industrial Materials vs. Hi Lai Foods Co
Performance |
| Timeline |
| Baotek Industrial |
| Hi Lai Foods |
Baotek Industrial and Hi Lai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baotek Industrial and Hi Lai
The main advantage of trading using opposite Baotek Industrial and Hi Lai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baotek Industrial position performs unexpectedly, Hi Lai 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 Hi Lai will offset losses from the drop in Hi Lai's long position.| Baotek Industrial vs. Eclat Textile Co | Baotek Industrial vs. Ruentex Industries | Baotek Industrial vs. Tainan Spinning Co | Baotek Industrial vs. Shinkong Synthetic Fiber |
| Hi Lai vs. Hung Sheng Construction | Hi Lai vs. Chung Hsin Electric Machinery | Hi Lai vs. Grand Ocean Retail | Hi Lai vs. Tait Marketing Distribution |
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 CEOs Directory module to screen CEOs from public companies around the world.
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