Correlation Between Hoshine Silicon and Ningbo Boway

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

Diversification Opportunities for Hoshine Silicon and Ningbo Boway

0.49

Correlation Coefficient

Hoshine Silicon  Ningbo Boway

Very weak diversification

The 3 months correlation between Hoshine and Ningbo is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hoshine Silicon Ind and Ningbo Boway Alloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Boway Alloy 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 Ningbo Boway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Boway Alloy has no effect on the direction of Hoshine Silicon i.e., Hoshine Silicon and Ningbo Boway go up and down completely randomly.

Pair Corralation between Hoshine Silicon and Ningbo Boway

Assuming the 90 days trading horizon Hoshine Silicon Ind is expected to under-perform the Ningbo Boway. But the stock apears to be less risky and, when comparing its historical volatility, Hoshine Silicon Ind is 1.18 times less risky than Ningbo Boway. The stock trades about -0.06 of its potential returns per unit of risk. The Ningbo Boway Alloy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,852  in Ningbo Boway Alloy on October 3, 2024 and sell it today you would earn a total of  178.00  from holding Ningbo Boway Alloy or generate 9.61% return on investment over 90 days.

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

Hoshine Silicon Ind  vs.  Ningbo Boway Alloy

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 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.

Ningbo Boway Alloy

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Boway Alloy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Boway sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hoshine Silicon and Ningbo Boway

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

The idea behind Hoshine Silicon Ind and Ningbo Boway Alloy 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.