Correlation Between Hoshine Silicon and Tianjin Ruixin

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

Diversification Opportunities for Hoshine Silicon and Tianjin Ruixin

0.63

Correlation Coefficient

Hoshine Silicon  Tianjin Ruixin

Poor diversification

The 3 months correlation between Hoshine and Tianjin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hoshine Silicon Ind and Tianjin Ruixin Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Ruixin Technology 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 Tianjin Ruixin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Ruixin Technology has no effect on the direction of Hoshine Silicon i.e., Hoshine Silicon and Tianjin Ruixin go up and down completely randomly.

Pair Corralation between Hoshine Silicon and Tianjin Ruixin

Assuming the 90 days trading horizon Hoshine Silicon Ind is expected to under-perform the Tianjin Ruixin. But the stock apears to be less risky and, when comparing its historical volatility, Hoshine Silicon Ind is 2.26 times less risky than Tianjin Ruixin. The stock trades about -0.1 of its potential returns per unit of risk. The Tianjin Ruixin Technology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,766  in Tianjin Ruixin Technology on December 10, 2024 and sell it today you would lose (98.00) from holding Tianjin Ruixin Technology or give up 5.55% 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.  Tianjin Ruixin Technology

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.

Tianjin Ruixin Technology

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Hoshine Silicon Ind and Tianjin Ruixin Technology 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.