Correlation Between American Express and Hi Sun
Can any of the company-specific risk be diversified away by investing in both American Express and Hi Sun 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 American Express and Hi Sun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Hi Sun Technology, you can compare the effects of market volatilities on American Express and Hi Sun 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 American Express with a short position of Hi Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Hi Sun.
Diversification Opportunities for American Express and Hi Sun
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and HISNF is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Hi Sun Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Sun Technology and American Express 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 American Express are associated (or correlated) with Hi Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Sun Technology has no effect on the direction of American Express i.e., American Express and Hi Sun go up and down completely randomly.
Pair Corralation between American Express and Hi Sun
Considering the 90-day investment horizon American Express is expected to under-perform the Hi Sun. But the stock apears to be less risky and, when comparing its historical volatility, American Express is 19.75 times less risky than Hi Sun. The stock trades about -0.22 of its potential returns per unit of risk. The Hi Sun Technology is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3.20 in Hi Sun Technology on December 1, 2024 and sell it today you would earn a total of 3.48 from holding Hi Sun Technology or generate 108.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Hi Sun Technology
Performance |
| Timeline |
| American Express |
| Hi Sun Technology |
American Express and Hi Sun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Hi Sun
The main advantage of trading using opposite American Express and Hi Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Hi Sun 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 Hi Sun will offset losses from the drop in Hi Sun's long position.| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart Holdings |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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