Correlation Between Hunya Foods and Nien Hsing

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

By analyzing existing cross correlation between Hunya Foods Co and Nien Hsing Textile, you can compare the effects of market volatilities on Hunya Foods and Nien Hsing 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 Hunya Foods with a short position of Nien Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hunya Foods and Nien Hsing.

Diversification Opportunities for Hunya Foods and Nien Hsing

0.3

Correlation Coefficient

Hunya Foods  Nien Hsing

Weak diversification

The 3 months correlation between Hunya and Nien is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hunya Foods Co and Nien Hsing Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nien Hsing Textile and Hunya Foods 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 Hunya Foods Co are associated (or correlated) with Nien Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nien Hsing Textile has no effect on the direction of Hunya Foods i.e., Hunya Foods and Nien Hsing go up and down completely randomly.

Pair Corralation between Hunya Foods and Nien Hsing

Assuming the 90 days trading horizon Hunya Foods is expected to generate 53.91 times less return on investment than Nien Hsing. But when comparing it to its historical volatility, Hunya Foods Co is 1.22 times less risky than Nien Hsing. It trades about 0.0 of its potential returns per unit of risk. Nien Hsing Textile is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,005  in Nien Hsing Textile on December 27, 2024 and sell it today you would earn a total of  200.00  from holding Nien Hsing Textile or generate 9.98% return on investment over 90 days.

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

Hunya Foods Co  vs.  Nien Hsing Textile

Hunya Foods

Risk-Adjusted Performance

Weak

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

Nien Hsing Textile

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nien Hsing Textile are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nien Hsing may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hunya Foods and Nien Hsing

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

The idea behind Hunya Foods Co and Nien Hsing Textile 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.