Correlation Between Galaxy Software and Hua Nan
Can any of the company-specific risk be diversified away by investing in both Galaxy Software and Hua Nan 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 Galaxy Software and Hua Nan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galaxy Software Services and Hua Nan Financial, you can compare the effects of market volatilities on Galaxy Software and Hua Nan 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 Galaxy Software with a short position of Hua Nan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galaxy Software and Hua Nan.
Diversification Opportunities for Galaxy Software and Hua Nan
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Galaxy and Hua is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Software Services and Hua Nan Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Nan Financial and Galaxy Software 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 Galaxy Software Services are associated (or correlated) with Hua Nan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Nan Financial has no effect on the direction of Galaxy Software i.e., Galaxy Software and Hua Nan go up and down completely randomly.
Pair Corralation between Galaxy Software and Hua Nan
Assuming the 90 days trading horizon Galaxy Software Services is expected to generate 49.63 times more return on investment than Hua Nan. However, Galaxy Software is 49.63 times more volatile than Hua Nan Financial. It trades about 0.05 of its potential returns per unit of risk. Hua Nan Financial is currently generating about 0.05 per unit of risk. If you would invest 12,640 in Galaxy Software Services on September 2, 2024 and sell it today you would lose (690.00) from holding Galaxy Software Services or give up 5.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Galaxy Software Services vs. Hua Nan Financial
Performance |
| Timeline |
| Galaxy Software Services |
| Hua Nan Financial |
Galaxy Software and Hua Nan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galaxy Software and Hua Nan
The main advantage of trading using opposite Galaxy Software and Hua Nan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galaxy Software position performs unexpectedly, Hua Nan 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 Hua Nan will offset losses from the drop in Hua Nan's long position.| Galaxy Software vs. Foxconn Technology Co | Galaxy Software vs. FocalTech Systems Co | Galaxy Software vs. Sesoda Corp | Galaxy Software vs. Wah Hong Industrial |
| Hua Nan vs. Central Reinsurance Corp | Hua Nan vs. Huaku Development Co | Hua Nan vs. Fubon Financial Holding |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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