Correlation Between Huang Hsiang and Da Cin

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

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

Diversification Opportunities for Huang Hsiang and Da Cin

0.07

Correlation Coefficient

Huang Hsiang  Da Cin

Significant diversification

The 3 months correlation between Huang and 2535 is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Huang Hsiang Construction and Da Cin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Da Cin Construction and Huang Hsiang 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 Huang Hsiang Construction are associated (or correlated) with Da Cin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Da Cin Construction has no effect on the direction of Huang Hsiang i.e., Huang Hsiang and Da Cin go up and down completely randomly.

Pair Corralation between Huang Hsiang and Da Cin

Assuming the 90 days trading horizon Huang Hsiang Construction is expected to under-perform the Da Cin. In addition to that, Huang Hsiang is 1.97 times more volatile than Da Cin Construction Co. It trades about -0.26 of its total potential returns per unit of risk. Da Cin Construction Co is currently generating about -0.07 per unit of volatility. If you would invest  5,470  in Da Cin Construction Co on October 9, 2024 and sell it today you would lose (60.00) from holding Da Cin Construction Co or give up 1.1% of portfolio value over 90 days.

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

Huang Hsiang Construction  vs.  Da Cin Construction Co

Huang Hsiang Construction

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Huang Hsiang Construction are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Huang Hsiang may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Da Cin Construction

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Da Cin Construction Co are ranked lower than 11 (%) 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.

Pair Trading with Huang Hsiang and Da Cin

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

The idea behind Huang Hsiang Construction and Da Cin Construction 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.