Correlation Between Hsinli Chemical and King Chou

Can any of the company-specific risk be diversified away by investing in both Hsinli Chemical and King Chou 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 Hsinli Chemical and King Chou into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hsinli Chemical Industrial and King Chou Marine, you can compare the effects of market volatilities on Hsinli Chemical and King Chou 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 Hsinli Chemical with a short position of King Chou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsinli Chemical and King Chou.

Diversification Opportunities for Hsinli Chemical and King Chou

0.0

Correlation Coefficient

Hsinli Chemical  King Chou

Pay attention - limited upside

The 3 months correlation between Hsinli and King is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hsinli Chemical Industrial and King Chou Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Chou Marine and Hsinli Chemical 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 Hsinli Chemical Industrial are associated (or correlated) with King Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Chou Marine has no effect on the direction of Hsinli Chemical i.e., Hsinli Chemical and King Chou go up and down completely randomly.

Pair Corralation between Hsinli Chemical and King Chou

If you would invest  4,830  in Hsinli Chemical Industrial on October 7, 2024 and sell it today you would earn a total of  260.00  from holding Hsinli Chemical Industrial or generate 5.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.33%
Values	Daily Returns

Hsinli Chemical Industrial  vs.  King Chou Marine

Hsinli Chemical Indu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hsinli Chemical Industrial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hsinli Chemical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

King Chou Marine

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hsinli Chemical and King Chou

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

The idea behind Hsinli Chemical Industrial and King Chou Marine 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.