Correlation Between Tengda Construction and Hoshine Silicon

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Can any of the company-specific risk be diversified away by investing in both Tengda Construction and Hoshine 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 Tengda Construction and Hoshine Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tengda Construction Group and Hoshine Silicon Ind, you can compare the effects of market volatilities on Tengda Construction and Hoshine 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 Tengda Construction with a short position of Hoshine Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tengda Construction and Hoshine Silicon.

Diversification Opportunities for Tengda Construction and Hoshine Silicon

TengdaHoshineDiversified AwayTengdaHoshineDiversified Away100%
0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Tengda and Hoshine is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tengda Construction Group and Hoshine Silicon Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoshine Silicon Ind and Tengda Construction 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 Tengda Construction Group are associated (or correlated) with Hoshine Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoshine Silicon Ind has no effect on the direction of Tengda Construction i.e., Tengda Construction and Hoshine Silicon go up and down completely randomly.

Pair Corralation between Tengda Construction and Hoshine Silicon

Assuming the 90 days trading horizon Tengda Construction Group is expected to generate 0.83 times more return on investment than Hoshine Silicon. However, Tengda Construction Group is 1.2 times less risky than Hoshine Silicon. It trades about -0.01 of its potential returns per unit of risk. Hoshine Silicon Ind is currently generating about -0.07 per unit of risk. If you would invest  240.00  in Tengda Construction Group on October 5, 2024 and sell it today you would lose (8.00) from holding Tengda Construction Group or give up 3.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Tengda Construction Group  vs.  Hoshine Silicon Ind

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 0102030
JavaScript chart by amCharts 3.21.15600512 603260
       Timeline  
Tengda Construction 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tengda Construction Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tengda Construction is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2.22.32.42.52.62.72.8
Hoshine Silicon Ind 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hoshine Silicon Ind has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan505254565860626466

Tengda Construction and Hoshine Silicon Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.94-5.94-3.95-1.960.03472.054.136.228.3 0.020.030.040.050.06
JavaScript chart by amCharts 3.21.15600512 603260
       Returns  

Pair Trading with Tengda Construction and Hoshine Silicon

The main advantage of trading using opposite Tengda Construction and Hoshine Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tengda Construction position performs unexpectedly, Hoshine 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 Hoshine Silicon will offset losses from the drop in Hoshine Silicon's long position.
The idea behind Tengda Construction Group and Hoshine Silicon Ind 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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