Correlation Between Da Cin and Hiwin Technologies

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

By analyzing existing cross correlation between Da Cin Construction Co and Hiwin Technologies Corp, you can compare the effects of market volatilities on Da Cin and Hiwin Technologies 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 Da Cin with a short position of Hiwin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Da Cin and Hiwin Technologies.

Diversification Opportunities for Da Cin and Hiwin Technologies

0.5

Correlation Coefficient

Da Cin  Hiwin Technologies

Very weak diversification

The 3 months correlation between 2535 and Hiwin is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Da Cin Construction Co and Hiwin Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiwin Technologies Corp and Da Cin 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 Da Cin Construction Co are associated (or correlated) with Hiwin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiwin Technologies Corp has no effect on the direction of Da Cin i.e., Da Cin and Hiwin Technologies go up and down completely randomly.

Pair Corralation between Da Cin and Hiwin Technologies

Assuming the 90 days trading horizon Da Cin is expected to generate 1.0 times less return on investment than Hiwin Technologies. But when comparing it to its historical volatility, Da Cin Construction Co is 1.27 times less risky than Hiwin Technologies. It trades about 0.09 of its potential returns per unit of risk. Hiwin Technologies Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  19,900  in Hiwin Technologies Corp on October 4, 2024 and sell it today you would earn a total of  10,950  from holding Hiwin Technologies Corp or generate 55.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.69%
Values	Daily Returns

Da Cin Construction Co  vs.  Hiwin Technologies Corp

Da Cin Construction

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Da Cin Construction Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Da Cin may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hiwin Technologies Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hiwin Technologies Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hiwin Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Da Cin and Hiwin Technologies

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

The idea behind Da Cin Construction Co and Hiwin Technologies Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.