Correlation Between Hoshine Silicon and City Development

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

By analyzing existing cross correlation between Hoshine Silicon Ind and City Development Environment, you can compare the effects of market volatilities on Hoshine Silicon and City Development 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 Hoshine Silicon with a short position of City Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hoshine Silicon and City Development.

Diversification Opportunities for Hoshine Silicon and City Development

0.6

Correlation Coefficient

Hoshine Silicon  City Development

Poor diversification

The 3 months correlation between Hoshine and City is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hoshine Silicon Ind and City Development Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Development Env and Hoshine Silicon 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 Hoshine Silicon Ind are associated (or correlated) with City Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Development Env has no effect on the direction of Hoshine Silicon i.e., Hoshine Silicon and City Development go up and down completely randomly.

Pair Corralation between Hoshine Silicon and City Development

Assuming the 90 days trading horizon Hoshine Silicon Ind is expected to under-perform the City Development. But the stock apears to be less risky and, when comparing its historical volatility, Hoshine Silicon Ind is 1.34 times less risky than City Development. The stock trades about -0.23 of its potential returns per unit of risk. The City Development Environment is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  1,411  in City Development Environment on October 9, 2024 and sell it today you would lose (147.00) from holding City Development Environment or give up 10.42% of portfolio value over 90 days.

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

Hoshine Silicon Ind  vs.  City Development Environment

Hoshine Silicon Ind

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Hoshine Silicon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

City Development Env

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in City Development Environment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, City Development is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hoshine Silicon and City Development

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

The idea behind Hoshine Silicon Ind and City Development Environment 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.