Correlation Between Hoshine Silicon and Ye Chiu

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

Diversification Opportunities for Hoshine Silicon and Ye Chiu

0.85

Correlation Coefficient

Hoshine Silicon  Ye Chiu

Very poor diversification

The 3 months correlation between Hoshine and 601388 is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hoshine Silicon Ind and Ye Chiu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ye Chiu Metal 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 Ye Chiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ye Chiu Metal has no effect on the direction of Hoshine Silicon i.e., Hoshine Silicon and Ye Chiu go up and down completely randomly.

Pair Corralation between Hoshine Silicon and Ye Chiu

Assuming the 90 days trading horizon Hoshine Silicon Ind is expected to under-perform the Ye Chiu. But the stock apears to be less risky and, when comparing its historical volatility, Hoshine Silicon Ind is 1.2 times less risky than Ye Chiu. The stock trades about -0.03 of its potential returns per unit of risk. The Ye Chiu Metal is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  255.00  in Ye Chiu Metal on December 26, 2024 and sell it today you would earn a total of  4.00  from holding Ye Chiu Metal or generate 1.57% return on investment over 90 days.

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

Hoshine Silicon Ind  vs.  Ye Chiu Metal

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 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.

Ye Chiu Metal

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ye Chiu Metal are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ye Chiu 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 Ye Chiu

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

The idea behind Hoshine Silicon Ind and Ye Chiu Metal 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..