Correlation Between Chief Telecom and Hsinli Chemical
Can any of the company-specific risk be diversified away by investing in both Chief Telecom and Hsinli Chemical 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 Chief Telecom and Hsinli Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chief Telecom and Hsinli Chemical Industrial, you can compare the effects of market volatilities on Chief Telecom and Hsinli Chemical 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 Chief Telecom with a short position of Hsinli Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chief Telecom and Hsinli Chemical.
Diversification Opportunities for Chief Telecom and Hsinli Chemical
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chief and Hsinli is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chief Telecom and Hsinli Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hsinli Chemical Indu and Chief Telecom 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 Chief Telecom are associated (or correlated) with Hsinli Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hsinli Chemical Indu has no effect on the direction of Chief Telecom i.e., Chief Telecom and Hsinli Chemical go up and down completely randomly.
Pair Corralation between Chief Telecom and Hsinli Chemical
Assuming the 90 days trading horizon Chief Telecom is expected to generate 1.98 times less return on investment than Hsinli Chemical. But when comparing it to its historical volatility, Chief Telecom is 1.99 times less risky than Hsinli Chemical. It trades about 0.08 of its potential returns per unit of risk. Hsinli Chemical Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,695 in Hsinli Chemical Industrial on November 3, 2024 and sell it today you would earn a total of 2,135 from holding Hsinli Chemical Industrial or generate 79.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chief Telecom vs. Hsinli Chemical Industrial
Performance |
| Timeline |
| Chief Telecom |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hsinli Chemical Indu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Chief Telecom and Hsinli Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chief Telecom and Hsinli Chemical
The main advantage of trading using opposite Chief Telecom and Hsinli Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chief Telecom position performs unexpectedly, Hsinli Chemical 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 Hsinli Chemical will offset losses from the drop in Hsinli Chemical's long position.The idea behind Chief Telecom and Hsinli Chemical Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |