Correlation Between Huang Hsiang and Highwealth Construction

Can any of the company-specific risk be diversified away by investing in both Huang Hsiang and Highwealth Construction 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 Highwealth Construction 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 Highwealth Construction Corp, you can compare the effects of market volatilities on Huang Hsiang and Highwealth Construction 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 Highwealth Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huang Hsiang and Highwealth Construction.

Diversification Opportunities for Huang Hsiang and Highwealth Construction

0.01

Correlation Coefficient

Huang Hsiang  Highwealth Construction

Significant diversification

The 3 months correlation between Huang and Highwealth is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Huang Hsiang Construction and Highwealth Construction Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwealth 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 Highwealth Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwealth Construction has no effect on the direction of Huang Hsiang i.e., Huang Hsiang and Highwealth Construction go up and down completely randomly.

Pair Corralation between Huang Hsiang and Highwealth Construction

Assuming the 90 days trading horizon Huang Hsiang Construction is expected to generate 0.91 times more return on investment than Highwealth Construction. However, Huang Hsiang Construction is 1.1 times less risky than Highwealth Construction. It trades about 0.16 of its potential returns per unit of risk. Highwealth Construction Corp is currently generating about -0.04 per unit of risk. If you would invest  5,920  in Huang Hsiang Construction on September 5, 2024 and sell it today you would earn a total of  1,600  from holding Huang Hsiang Construction or generate 27.03% return on investment over 90 days.

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

Huang Hsiang Construction  vs.  Highwealth Construction Corp

Huang Hsiang Construction

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Huang Hsiang Construction are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Huang Hsiang showed solid returns over the last few months and may actually be approaching a breakup point.

Highwealth Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highwealth Construction Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Huang Hsiang and Highwealth Construction

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

The idea behind Huang Hsiang Construction and Highwealth Construction 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..