Correlation Between Hsing Ta and Sinher Technology

Can any of the company-specific risk be diversified away by investing in both Hsing Ta and Sinher Technology 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 Sinher Technology 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 Sinher Technology, you can compare the effects of market volatilities on Hsing Ta and Sinher Technology 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 Sinher Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsing Ta and Sinher Technology.

Diversification Opportunities for Hsing Ta and Sinher Technology

0.44

Correlation Coefficient

Hsing Ta  Sinher Technology

Very weak diversification

The 3 months correlation between Hsing and Sinher is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hsing Ta Cement and Sinher Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinher Technology 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 Sinher Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinher Technology has no effect on the direction of Hsing Ta i.e., Hsing Ta and Sinher Technology go up and down completely randomly.

Pair Corralation between Hsing Ta and Sinher Technology

Assuming the 90 days trading horizon Hsing Ta Cement is expected to under-perform the Sinher Technology. But the stock apears to be less risky and, when comparing its historical volatility, Hsing Ta Cement is 2.35 times less risky than Sinher Technology. The stock trades about -0.05 of its potential returns per unit of risk. The Sinher Technology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,350  in Sinher Technology on September 19, 2024 and sell it today you would lose (25.00) from holding Sinher Technology or give up 0.75% of portfolio value over 90 days.

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

Hsing Ta Cement  vs.  Sinher Technology

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.

Sinher Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinher Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sinher Technology 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 Sinher Technology

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

The idea behind Hsing Ta Cement and Sinher Technology 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.