Correlation Between Hoshine Silicon and Nantong Jiangshan

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

Diversification Opportunities for Hoshine Silicon and Nantong Jiangshan

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Hoshine and Nantong is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hoshine Silicon Ind and Nantong Jiangshan Agrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantong Jiangshan 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 Nantong Jiangshan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantong Jiangshan has no effect on the direction of Hoshine Silicon i.e., Hoshine Silicon and Nantong Jiangshan go up and down completely randomly.

Pair Corralation between Hoshine Silicon and Nantong Jiangshan

Assuming the 90 days trading horizon Hoshine Silicon is expected to generate 4.72 times less return on investment than Nantong Jiangshan. In addition to that, Hoshine Silicon is 1.25 times more volatile than Nantong Jiangshan Agrochemical. It trades about 0.01 of its total potential returns per unit of risk. Nantong Jiangshan Agrochemical is currently generating about 0.03 per unit of volatility. If you would invest  1,395  in Nantong Jiangshan Agrochemical on October 22, 2024 and sell it today you would earn a total of  35.00  from holding Nantong Jiangshan Agrochemical or generate 2.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Hoshine Silicon Ind  vs.  Nantong Jiangshan Agrochemical

 Performance 
       Timeline  
Hoshine Silicon Ind 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Nantong Jiangshan 

Risk-Adjusted Performance

2 of 100

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

Hoshine Silicon and Nantong Jiangshan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hoshine Silicon and Nantong Jiangshan

The main advantage of trading using opposite Hoshine Silicon and Nantong Jiangshan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hoshine Silicon position performs unexpectedly, Nantong Jiangshan 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 Nantong Jiangshan will offset losses from the drop in Nantong Jiangshan's long position.
The idea behind Hoshine Silicon Ind and Nantong Jiangshan Agrochemical 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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