Correlation Between Hsing Ta and AGV Products

Can any of the company-specific risk be diversified away by investing in both Hsing Ta and AGV Products 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 Hsing Ta and AGV Products into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hsing Ta Cement and AGV Products Corp, you can compare the effects of market volatilities on Hsing Ta and AGV Products 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 Hsing Ta with a short position of AGV Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsing Ta and AGV Products.

Diversification Opportunities for Hsing Ta and AGV Products

0.69

Correlation Coefficient

Hsing Ta  AGV Products

Poor diversification

The 3 months correlation between Hsing and AGV is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hsing Ta Cement and AGV Products Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGV Products Corp and Hsing Ta 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 Hsing Ta Cement are associated (or correlated) with AGV Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGV Products Corp has no effect on the direction of Hsing Ta i.e., Hsing Ta and AGV Products go up and down completely randomly.

Pair Corralation between Hsing Ta and AGV Products

Assuming the 90 days trading horizon Hsing Ta is expected to generate 1.03 times less return on investment than AGV Products. But when comparing it to its historical volatility, Hsing Ta Cement is 1.31 times less risky than AGV Products. It trades about 0.03 of its potential returns per unit of risk. AGV Products Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,065  in AGV Products Corp on October 4, 2024 and sell it today you would earn a total of  105.00  from holding AGV Products Corp or generate 9.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Hsing Ta Cement  vs.  AGV Products Corp

Hsing Ta Cement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hsing Ta Cement has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hsing Ta is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AGV Products Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGV Products Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, AGV Products is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hsing Ta and AGV Products

The main advantage of trading using opposite Hsing Ta and AGV Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsing Ta position performs unexpectedly, AGV Products 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 AGV Products will offset losses from the drop in AGV Products' long position.

The idea behind Hsing Ta Cement and AGV Products Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .