Correlation Between Hsin Kuang and YC Inox

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

Diversification Opportunities for Hsin Kuang and YC Inox

0.74

Correlation Coefficient

Hsin Kuang  YC Inox

Poor diversification

The 3 months correlation between Hsin and 2034 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Kuang Steel and YC Inox Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YC Inox 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 YC Inox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YC Inox has no effect on the direction of Hsin Kuang i.e., Hsin Kuang and YC Inox go up and down completely randomly.

Pair Corralation between Hsin Kuang and YC Inox

Assuming the 90 days trading horizon Hsin Kuang is expected to generate 5.1 times less return on investment than YC Inox. But when comparing it to its historical volatility, Hsin Kuang Steel is 1.37 times less risky than YC Inox. It trades about 0.06 of its potential returns per unit of risk. YC Inox Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,020  in YC Inox Co on December 2, 2024 and sell it today you would earn a total of  735.00  from holding YC Inox Co or generate 36.39% return on investment over 90 days.

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

Hsin Kuang Steel  vs.  YC Inox Co

Hsin Kuang Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hsin Kuang Steel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hsin Kuang may actually be approaching a critical reversion point that can send shares even higher in April 2025.

YC Inox

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in YC Inox Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, YC Inox showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hsin Kuang and YC Inox

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

The idea behind Hsin Kuang Steel and YC Inox Co 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 Commodity Directory module to find actively traded commodities issued by global exchanges.