Correlation Between Hsinjing Holding and TSEC Corp

Can any of the company-specific risk be diversified away by investing in both Hsinjing Holding and TSEC Corp 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 Hsinjing Holding and TSEC Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Hsinjing Holding and TSEC Corp

0.24

Correlation Coefficient

Hsinjing Holding  TSEC Corp

Modest diversification

The 3 months correlation between Hsinjing and TSEC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hsinjing Holding Co and TSEC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSEC Corp and Hsinjing Holding 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 Hsinjing Holding Co are associated (or correlated) with TSEC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSEC Corp has no effect on the direction of Hsinjing Holding i.e., Hsinjing Holding and TSEC Corp go up and down completely randomly.

Pair Corralation between Hsinjing Holding and TSEC Corp

Assuming the 90 days trading horizon Hsinjing Holding Co is expected to under-perform the TSEC Corp. But the stock apears to be less risky and, when comparing its historical volatility, Hsinjing Holding Co is 1.63 times less risky than TSEC Corp. The stock trades about -0.04 of its potential returns per unit of risk. The TSEC Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,010  in TSEC Corp on December 4, 2024 and sell it today you would lose (45.00) from holding TSEC Corp or give up 2.24% of portfolio value over 90 days.

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

Hsinjing Holding Co  vs.  TSEC Corp

Hsinjing Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hsinjing Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hsinjing Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

TSEC Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days TSEC Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, TSEC Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hsinjing Holding and TSEC Corp

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

The idea behind Hsinjing Holding Co and TSEC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.