Correlation Between Giant Manufacturing and Hotai
Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and Hotai 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 Hotai 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 Hotai Motor Co, you can compare the effects of market volatilities on Giant Manufacturing and Hotai 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 Hotai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and Hotai.
Diversification Opportunities for Giant Manufacturing and Hotai
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Giant and Hotai is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Hotai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Motor 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 Hotai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Motor has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Hotai go up and down completely randomly.
Pair Corralation between Giant Manufacturing and Hotai
Assuming the 90 days trading horizon Giant Manufacturing Co is expected to under-perform the Hotai. In addition to that, Giant Manufacturing is 1.6 times more volatile than Hotai Motor Co. It trades about -0.38 of its total potential returns per unit of risk. Hotai Motor Co is currently generating about -0.18 per unit of volatility. If you would invest 64,700 in Hotai Motor Co on September 3, 2024 and sell it today you would lose (3,300) from holding Hotai Motor Co or give up 5.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Giant Manufacturing Co vs. Hotai Motor Co
Performance |
| Timeline |
| Giant Manufacturing |
| Hotai Motor |
Giant Manufacturing and Hotai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Giant Manufacturing and Hotai
The main advantage of trading using opposite Giant Manufacturing and Hotai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Hotai 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 Hotai will offset losses from the drop in Hotai's long position.| Giant Manufacturing vs. Tainan Spinning Co | Giant Manufacturing vs. Chia Her Industrial | Giant Manufacturing vs. WiseChip Semiconductor | Giant Manufacturing vs. Novatek Microelectronics Corp |
| Hotai vs. President Chain Store | Hotai vs. Formosa Petrochemical Corp | Hotai vs. Cheng Shin Rubber | Hotai vs. Formosa Chemicals Fibre |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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