Correlation Between Hoshine Silicon and Xinjiang Zhongtai

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

Diversification Opportunities for Hoshine Silicon and Xinjiang Zhongtai

0.65

Correlation Coefficient

Hoshine Silicon  Xinjiang Zhongtai

Poor diversification

The 3 months correlation between Hoshine and Xinjiang is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hoshine Silicon Ind and Xinjiang Zhongtai Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Zhongtai 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 Xinjiang Zhongtai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Zhongtai has no effect on the direction of Hoshine Silicon i.e., Hoshine Silicon and Xinjiang Zhongtai go up and down completely randomly.

Pair Corralation between Hoshine Silicon and Xinjiang Zhongtai

Assuming the 90 days trading horizon Hoshine Silicon Ind is expected to under-perform the Xinjiang Zhongtai. In addition to that, Hoshine Silicon is 1.41 times more volatile than Xinjiang Zhongtai Chemical. It trades about -0.02 of its total potential returns per unit of risk. Xinjiang Zhongtai Chemical is currently generating about 0.12 per unit of volatility. If you would invest  429.00  in Xinjiang Zhongtai Chemical on December 2, 2024 and sell it today you would earn a total of  21.00  from holding Xinjiang Zhongtai Chemical or generate 4.9% return on investment over 90 days.

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

Hoshine Silicon Ind  vs.  Xinjiang Zhongtai Chemical

Hoshine Silicon Ind

Risk-Adjusted Performance

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.

Xinjiang Zhongtai

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xinjiang Zhongtai Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xinjiang Zhongtai 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 Xinjiang Zhongtai

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

The idea behind Hoshine Silicon Ind and Xinjiang Zhongtai Chemical 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.