Correlation Between Hsin Kuang and Chung Hung
Can any of the company-specific risk be diversified away by investing in both Hsin Kuang and Chung Hung 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 Hsin Kuang and Chung Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hsin Kuang Steel and Chung Hung Steel, you can compare the effects of market volatilities on Hsin Kuang and Chung Hung 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 Hsin Kuang with a short position of Chung Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Kuang and Chung Hung.
Diversification Opportunities for Hsin Kuang and Chung Hung
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hsin and Chung is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Kuang Steel and Chung Hung Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hung Steel and Hsin Kuang 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 Hsin Kuang Steel are associated (or correlated) with Chung Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hung Steel has no effect on the direction of Hsin Kuang i.e., Hsin Kuang and Chung Hung go up and down completely randomly.
Pair Corralation between Hsin Kuang and Chung Hung
Assuming the 90 days trading horizon Hsin Kuang Steel is expected to under-perform the Chung Hung. But the stock apears to be less risky and, when comparing its historical volatility, Hsin Kuang Steel is 1.64 times less risky than Chung Hung. The stock trades about -0.16 of its potential returns per unit of risk. The Chung Hung Steel is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,800 in Chung Hung Steel on September 13, 2024 and sell it today you would earn a total of 135.00 from holding Chung Hung Steel or generate 7.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hsin Kuang Steel vs. Chung Hung Steel
Performance |
Timeline |
Hsin Kuang Steel |
Chung Hung Steel |
Hsin Kuang and Chung Hung Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hsin Kuang and Chung Hung
The main advantage of trading using opposite Hsin Kuang and Chung Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Kuang position performs unexpectedly, Chung Hung 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 Chung Hung will offset losses from the drop in Chung Hung's long position.Hsin Kuang vs. Chung Hung Steel | Hsin Kuang vs. Tung Ho Steel | Hsin Kuang vs. Ta Chen Stainless | Hsin Kuang vs. Feng Hsin Steel |
Chung Hung vs. Tainan Spinning Co | Chung Hung vs. Lealea Enterprise Co | Chung Hung vs. China Petrochemical Development | Chung Hung vs. Ruentex Development Co |
Check out your portfolio center.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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