Correlation Between Hsin Ba and Scan D
Can any of the company-specific risk be diversified away by investing in both Hsin Ba and Scan D 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 Hsin Ba and Scan D into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hsin Ba Ba and Scan D, you can compare the effects of market volatilities on Hsin Ba and Scan D 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 Hsin Ba with a short position of Scan D. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Ba and Scan D.
Diversification Opportunities for Hsin Ba and Scan D
Poor diversification
The 3 months correlation between Hsin and Scan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Ba Ba and Scan D in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scan D and Hsin Ba 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 Hsin Ba Ba are associated (or correlated) with Scan D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scan D has no effect on the direction of Hsin Ba i.e., Hsin Ba and Scan D go up and down completely randomly.
Pair Corralation between Hsin Ba and Scan D
Assuming the 90 days trading horizon Hsin Ba Ba is expected to generate 3.03 times more return on investment than Scan D. However, Hsin Ba is 3.03 times more volatile than Scan D. It trades about 0.1 of its potential returns per unit of risk. Scan D is currently generating about -0.04 per unit of risk. If you would invest 4,965 in Hsin Ba Ba on October 28, 2024 and sell it today you would earn a total of 6,035 from holding Hsin Ba Ba or generate 121.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hsin Ba Ba vs. Scan D
Performance |
| Timeline |
| Hsin Ba Ba |
| Scan D |
Hsin Ba and Scan D Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsin Ba and Scan D
The main advantage of trading using opposite Hsin Ba and Scan D positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Ba position performs unexpectedly, Scan D 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 Scan D will offset losses from the drop in Scan D's long position.| Hsin Ba vs. Chang Type Industrial | Hsin Ba vs. Anderson Industrial Corp | Hsin Ba vs. Klingon Aerospace | Hsin Ba vs. Basso Industry Corp |
| Scan D vs. Arbor Technology | Scan D vs. Grand Ocean Retail | Scan D vs. Louisa Professional Coffee | Scan D vs. Elitegroup Computer Systems |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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