Correlation Between Worthington Steel and Hongli Group
Can any of the company-specific risk be diversified away by investing in both Worthington Steel and Hongli Group 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 Worthington Steel and Hongli Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worthington Steel and Hongli Group Ordinary, you can compare the effects of market volatilities on Worthington Steel and Hongli Group 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 Worthington Steel with a short position of Hongli Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worthington Steel and Hongli Group.
Diversification Opportunities for Worthington Steel and Hongli Group
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Worthington and Hongli is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Steel and Hongli Group Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hongli Group Ordinary and Worthington Steel 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 Worthington Steel are associated (or correlated) with Hongli Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hongli Group Ordinary has no effect on the direction of Worthington Steel i.e., Worthington Steel and Hongli Group go up and down completely randomly.
Pair Corralation between Worthington Steel and Hongli Group
Allowing for the 90-day total investment horizon Worthington Steel is expected to generate 0.65 times more return on investment than Hongli Group. However, Worthington Steel is 1.54 times less risky than Hongli Group. It trades about 0.24 of its potential returns per unit of risk. Hongli Group Ordinary is currently generating about 0.06 per unit of risk. If you would invest 3,824 in Worthington Steel on September 1, 2024 and sell it today you would earn a total of 660.00 from holding Worthington Steel or generate 17.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worthington Steel vs. Hongli Group Ordinary
Performance |
| Timeline |
| Worthington Steel |
| Hongli Group Ordinary |
Worthington Steel and Hongli Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worthington Steel and Hongli Group
The main advantage of trading using opposite Worthington Steel and Hongli Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worthington Steel position performs unexpectedly, Hongli Group 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 Hongli Group will offset losses from the drop in Hongli Group's long position.| Worthington Steel vs. Fortitude Gold Corp | Worthington Steel vs. New Gold | Worthington Steel vs. Galiano Gold | Worthington Steel vs. GoldMining |
| Hongli Group vs. Presidio Property Trust | Hongli Group vs. Codexis | Hongli Group vs. Sensient Technologies | Hongli Group vs. MGIC Investment 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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