Correlation Between Hoshine Silicon and Zhejiang Longsheng

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

Diversification Opportunities for Hoshine Silicon and Zhejiang Longsheng

HoshineZhejiangDiversified AwayHoshineZhejiangDiversified Away100%
0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Hoshine and Zhejiang is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hoshine Silicon Ind and Zhejiang Longsheng Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Longsheng 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 Zhejiang Longsheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Longsheng has no effect on the direction of Hoshine Silicon i.e., Hoshine Silicon and Zhejiang Longsheng go up and down completely randomly.

Pair Corralation between Hoshine Silicon and Zhejiang Longsheng

Assuming the 90 days trading horizon Hoshine Silicon Ind is expected to generate 1.82 times more return on investment than Zhejiang Longsheng. However, Hoshine Silicon is 1.82 times more volatile than Zhejiang Longsheng Group. It trades about 0.11 of its potential returns per unit of risk. Zhejiang Longsheng Group is currently generating about 0.17 per unit of risk. If you would invest  4,966  in Hoshine Silicon Ind on September 23, 2024 and sell it today you would earn a total of  1,034  from holding Hoshine Silicon Ind or generate 20.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Hoshine Silicon Ind  vs.  Zhejiang Longsheng Group

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 051015202530
JavaScript chart by amCharts 3.21.15603260 600352
       Timeline  
Hoshine Silicon Ind 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Hoshine Silicon Ind are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hoshine Silicon sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec50556065
Zhejiang Longsheng 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Longsheng Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang Longsheng sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec99.51010.51111.5

Hoshine Silicon and Zhejiang Longsheng Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.43-7.06-4.69-2.330.04172.55.07.510.0 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15603260 600352
       Returns  

Pair Trading with Hoshine Silicon and Zhejiang Longsheng

The main advantage of trading using opposite Hoshine Silicon and Zhejiang Longsheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hoshine Silicon position performs unexpectedly, Zhejiang Longsheng 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 Zhejiang Longsheng will offset losses from the drop in Zhejiang Longsheng's long position.
The idea behind Hoshine Silicon Ind and Zhejiang Longsheng Group 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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