Correlation Between Hsinli Chemical and Phoenix Silicon

Can any of the company-specific risk be diversified away by investing in both Hsinli Chemical and Phoenix Silicon 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 Phoenix Silicon 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 Phoenix Silicon International, you can compare the effects of market volatilities on Hsinli Chemical and Phoenix Silicon 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 Phoenix Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsinli Chemical and Phoenix Silicon.

Diversification Opportunities for Hsinli Chemical and Phoenix Silicon

0.32

Correlation Coefficient

Hsinli Chemical  Phoenix Silicon

Weak diversification

The 3 months correlation between Hsinli and Phoenix is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hsinli Chemical Industrial and Phoenix Silicon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Silicon Inte 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 Phoenix Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Silicon Inte has no effect on the direction of Hsinli Chemical i.e., Hsinli Chemical and Phoenix Silicon go up and down completely randomly.

Pair Corralation between Hsinli Chemical and Phoenix Silicon

Assuming the 90 days trading horizon Hsinli Chemical Industrial is expected to generate 0.58 times more return on investment than Phoenix Silicon. However, Hsinli Chemical Industrial is 1.72 times less risky than Phoenix Silicon. It trades about -0.03 of its potential returns per unit of risk. Phoenix Silicon International is currently generating about -0.12 per unit of risk. If you would invest  4,905  in Hsinli Chemical Industrial on October 23, 2024 and sell it today you would lose (65.00) from holding Hsinli Chemical Industrial or give up 1.33% of portfolio value over 90 days.

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

Hsinli Chemical Industrial  vs.  Phoenix Silicon International

Hsinli Chemical Indu

Risk-Adjusted Performance

0 of 100

Very Weak

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

Phoenix Silicon Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phoenix Silicon International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Phoenix Silicon 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 Hsinli Chemical and Phoenix Silicon

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

The idea behind Hsinli Chemical Industrial and Phoenix Silicon International 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.