Correlation Between Ho Tung and Dynapack International

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

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

Diversification Opportunities for Ho Tung and Dynapack International

-0.2

Correlation Coefficient

Ho Tung  Dynapack International

Good diversification

The 3 months correlation between 1714 and Dynapack is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ho Tung Chemical and Dynapack International Technol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynapack International and Ho Tung 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 Ho Tung Chemical are associated (or correlated) with Dynapack International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynapack International has no effect on the direction of Ho Tung i.e., Ho Tung and Dynapack International go up and down completely randomly.

Pair Corralation between Ho Tung and Dynapack International

Assuming the 90 days trading horizon Ho Tung Chemical is expected to generate 0.21 times more return on investment than Dynapack International. However, Ho Tung Chemical is 4.71 times less risky than Dynapack International. It trades about 0.18 of its potential returns per unit of risk. Dynapack International Technology is currently generating about -0.06 per unit of risk. If you would invest  803.00  in Ho Tung Chemical on December 30, 2024 and sell it today you would earn a total of  62.00  from holding Ho Tung Chemical or generate 7.72% return on investment over 90 days.

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

Ho Tung Chemical  vs.  Dynapack International Technol

Ho Tung Chemical

Risk-Adjusted Performance

Good

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

Dynapack International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynapack International Technology 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ho Tung and Dynapack International

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

The idea behind Ho Tung Chemical and Dynapack International 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.