Correlation Between Hong Ho and Ennostar

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

By analyzing existing cross correlation between Hong Ho Precision and Ennostar, you can compare the effects of market volatilities on Hong Ho and Ennostar 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 Hong Ho with a short position of Ennostar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Ho and Ennostar.

Diversification Opportunities for Hong Ho and Ennostar

0.14

Correlation Coefficient

Hong Ho  Ennostar

Average diversification

The 3 months correlation between Hong and Ennostar is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hong Ho Precision and Ennostar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ennostar and Hong Ho 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 Hong Ho Precision are associated (or correlated) with Ennostar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ennostar has no effect on the direction of Hong Ho i.e., Hong Ho and Ennostar go up and down completely randomly.

Pair Corralation between Hong Ho and Ennostar

Assuming the 90 days trading horizon Hong Ho Precision is expected to under-perform the Ennostar. But the stock apears to be less risky and, when comparing its historical volatility, Hong Ho Precision is 1.0 times less risky than Ennostar. The stock trades about -0.14 of its potential returns per unit of risk. The Ennostar is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,180  in Ennostar on December 31, 2024 and sell it today you would lose (40.00) from holding Ennostar or give up 0.96% of portfolio value over 90 days.

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

Hong Ho Precision  vs.  Ennostar

Hong Ho Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hong Ho Precision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Ennostar

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Hong Ho Precision and Ennostar 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 Transaction History module to view history of all your transactions and understand their impact on performance.