Correlation Between Hithink RoyalFlush and Wankai New

Can any of the company-specific risk be diversified away by investing in both Hithink RoyalFlush and Wankai New 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 Hithink RoyalFlush and Wankai New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hithink RoyalFlush Info and Wankai New Materials, you can compare the effects of market volatilities on Hithink RoyalFlush and Wankai New 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 Hithink RoyalFlush with a short position of Wankai New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hithink RoyalFlush and Wankai New.

Diversification Opportunities for Hithink RoyalFlush and Wankai New

0.69

Correlation Coefficient

Hithink RoyalFlush  Wankai New

Poor diversification

The 3 months correlation between Hithink and Wankai is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hithink RoyalFlush Info and Wankai New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wankai New Materials and Hithink RoyalFlush 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 Hithink RoyalFlush Info are associated (or correlated) with Wankai New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wankai New Materials has no effect on the direction of Hithink RoyalFlush i.e., Hithink RoyalFlush and Wankai New go up and down completely randomly.

Pair Corralation between Hithink RoyalFlush and Wankai New

Assuming the 90 days trading horizon Hithink RoyalFlush Info is expected to generate 3.51 times more return on investment than Wankai New. However, Hithink RoyalFlush is 3.51 times more volatile than Wankai New Materials. It trades about 0.19 of its potential returns per unit of risk. Wankai New Materials is currently generating about -0.06 per unit of risk. If you would invest  20,000  in Hithink RoyalFlush Info on September 23, 2024 and sell it today you would earn a total of  10,583  from holding Hithink RoyalFlush Info or generate 52.92% return on investment over 90 days.

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

Hithink RoyalFlush Info  vs.  Wankai New Materials

Hithink RoyalFlush Info

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hithink RoyalFlush Info are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hithink RoyalFlush sustained solid returns over the last few months and may actually be approaching a breakup point.

Wankai New Materials

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wankai New Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wankai New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hithink RoyalFlush and Wankai New

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

The idea behind Hithink RoyalFlush Info and Wankai New Materials 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.