Correlation Between Hainan Haiqi and National Silicon

Can any of the company-specific risk be diversified away by investing in both Hainan Haiqi and National 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 Hainan Haiqi and National Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hainan Haiqi Transportation and National Silicon Industry, you can compare the effects of market volatilities on Hainan Haiqi and National 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 Hainan Haiqi with a short position of National Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Haiqi and National Silicon.

Diversification Opportunities for Hainan Haiqi and National Silicon

0.25

Correlation Coefficient

Hainan Haiqi  National Silicon

Modest diversification

The 3 months correlation between Hainan and National is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Haiqi Transportation and National Silicon Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Silicon Industry and Hainan Haiqi 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 Hainan Haiqi Transportation are associated (or correlated) with National Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Silicon Industry has no effect on the direction of Hainan Haiqi i.e., Hainan Haiqi and National Silicon go up and down completely randomly.

Pair Corralation between Hainan Haiqi and National Silicon

Assuming the 90 days trading horizon Hainan Haiqi Transportation is expected to generate 0.78 times more return on investment than National Silicon. However, Hainan Haiqi Transportation is 1.29 times less risky than National Silicon. It trades about 0.03 of its potential returns per unit of risk. National Silicon Industry is currently generating about -0.11 per unit of risk. If you would invest  1,650  in Hainan Haiqi Transportation on October 9, 2024 and sell it today you would earn a total of  40.00  from holding Hainan Haiqi Transportation or generate 2.42% return on investment over 90 days.

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

Hainan Haiqi Transportation  vs.  National Silicon Industry

Hainan Haiqi Transpo

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hainan Haiqi Transportation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hainan Haiqi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

National Silicon Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Silicon Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hainan Haiqi and National Silicon

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

The idea behind Hainan Haiqi Transportation and National Silicon Industry 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.