Correlation Between Hoshine Silicon and Suzhou Xingye

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

Diversification Opportunities for Hoshine Silicon and Suzhou Xingye

0.46

Correlation Coefficient

Hoshine Silicon  Suzhou Xingye

Very weak diversification

The 3 months correlation between Hoshine and Suzhou is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hoshine Silicon Ind and Suzhou Xingye Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Xingye Material 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 Suzhou Xingye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Xingye Material has no effect on the direction of Hoshine Silicon i.e., Hoshine Silicon and Suzhou Xingye go up and down completely randomly.

Pair Corralation between Hoshine Silicon and Suzhou Xingye

Assuming the 90 days trading horizon Hoshine Silicon Ind is expected to under-perform the Suzhou Xingye. But the stock apears to be less risky and, when comparing its historical volatility, Hoshine Silicon Ind is 1.73 times less risky than Suzhou Xingye. The stock trades about -0.09 of its potential returns per unit of risk. The Suzhou Xingye Material is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  818.00  in Suzhou Xingye Material on October 24, 2024 and sell it today you would earn a total of  273.00  from holding Suzhou Xingye Material or generate 33.37% 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.  Suzhou Xingye Material

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.

Suzhou Xingye Material

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Suzhou Xingye Material are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Suzhou Xingye sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hoshine Silicon and Suzhou Xingye

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

The idea behind Hoshine Silicon Ind and Suzhou Xingye Material 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.