Correlation Between Progate and Hong Tai
Can any of the company-specific risk be diversified away by investing in both Progate and Hong Tai 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 Progate and Hong Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progate Group and Hong Tai Electric, you can compare the effects of market volatilities on Progate and Hong Tai 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 Progate with a short position of Hong Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progate and Hong Tai.
Diversification Opportunities for Progate and Hong Tai
Poor diversification
The 3 months correlation between Progate and Hong is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Progate Group and Hong Tai Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Tai Electric and Progate 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 Progate Group are associated (or correlated) with Hong Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Tai Electric has no effect on the direction of Progate i.e., Progate and Hong Tai go up and down completely randomly.
Pair Corralation between Progate and Hong Tai
Assuming the 90 days trading horizon Progate Group is expected to under-perform the Hong Tai. In addition to that, Progate is 2.43 times more volatile than Hong Tai Electric. It trades about -0.14 of its total potential returns per unit of risk. Hong Tai Electric is currently generating about 0.05 per unit of volatility. If you would invest 3,395 in Hong Tai Electric on August 26, 2024 and sell it today you would earn a total of 40.00 from holding Hong Tai Electric or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Progate Group vs. Hong Tai Electric
Performance |
| Timeline |
| Progate Group |
| Hong Tai Electric |
Progate and Hong Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Progate and Hong Tai
The main advantage of trading using opposite Progate and Hong Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progate position performs unexpectedly, Hong Tai 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 Hong Tai will offset losses from the drop in Hong Tai's long position.| Progate vs. Taiwan Semiconductor Manufacturing | Progate vs. Hon Hai Precision | Progate vs. MediaTek | Progate vs. Chunghwa Telecom Co |
| Hong Tai vs. Sunny Friend Environmental | Hong Tai vs. TTET Union Corp | Hong Tai vs. ECOVE Environment Corp | Hong Tai vs. Yulon Finance Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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