Correlation Between Giant Manufacturing and Hsing Ta
Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and Hsing Ta 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 Giant Manufacturing and Hsing Ta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Giant Manufacturing Co and Hsing Ta Cement, you can compare the effects of market volatilities on Giant Manufacturing and Hsing Ta 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 Giant Manufacturing with a short position of Hsing Ta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and Hsing Ta.
Diversification Opportunities for Giant Manufacturing and Hsing Ta
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Giant and Hsing is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Hsing Ta Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hsing Ta Cement and Giant Manufacturing 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 Giant Manufacturing Co are associated (or correlated) with Hsing Ta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hsing Ta Cement has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Hsing Ta go up and down completely randomly.
Pair Corralation between Giant Manufacturing and Hsing Ta
Assuming the 90 days trading horizon Giant Manufacturing Co is expected to under-perform the Hsing Ta. In addition to that, Giant Manufacturing is 2.3 times more volatile than Hsing Ta Cement. It trades about -0.02 of its total potential returns per unit of risk. Hsing Ta Cement is currently generating about 0.01 per unit of volatility. If you would invest 1,770 in Hsing Ta Cement on August 29, 2024 and sell it today you would earn a total of 50.00 from holding Hsing Ta Cement or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Giant Manufacturing Co vs. Hsing Ta Cement
Performance |
| Timeline |
| Giant Manufacturing |
| Hsing Ta Cement |
Giant Manufacturing and Hsing Ta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Giant Manufacturing and Hsing Ta
The main advantage of trading using opposite Giant Manufacturing and Hsing Ta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Hsing Ta 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 Hsing Ta will offset losses from the drop in Hsing Ta's long position.| Giant Manufacturing vs. Merida Industry Co | Giant Manufacturing vs. President Chain Store | Giant Manufacturing vs. Cheng Shin Rubber | Giant Manufacturing vs. Uni President Enterprises 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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