Correlation Between Nasdaq and Hong Tai
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Hong Tai 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 Nasdaq and Hong Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Hong Tai Electric, you can compare the effects of market volatilities on Nasdaq and Hong Tai 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 Nasdaq with a short position of Hong Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Hong Tai.
Diversification Opportunities for Nasdaq and Hong Tai
Excellent diversification
The 3 months correlation between Nasdaq and Hong is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Hong Tai Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Tai Electric and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Hong Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Tai Electric has no effect on the direction of Nasdaq i.e., Nasdaq and Hong Tai go up and down completely randomly.
Pair Corralation between Nasdaq and Hong Tai
Given the investment horizon of 90 days Nasdaq is expected to generate 4.86 times less return on investment than Hong Tai. In addition to that, Nasdaq is 1.19 times more volatile than Hong Tai Electric. It trades about 0.01 of its total potential returns per unit of risk. Hong Tai Electric is currently generating about 0.07 per unit of volatility. If you would invest 3,380 in Hong Tai Electric on December 28, 2024 and sell it today you would earn a total of 155.00 from holding Hong Tai Electric or generate 4.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 91.67% |
Values | Daily Returns |
Nasdaq Inc vs. Hong Tai Electric
Performance |
Timeline |
Nasdaq Inc |
Hong Tai Electric |
Nasdaq and Hong Tai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasdaq and Hong Tai
The main advantage of trading using opposite Nasdaq and Hong Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Hong Tai 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 Hong Tai will offset losses from the drop in Hong Tai's long position.The idea behind Nasdaq Inc and Hong Tai Electric 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.Hong Tai vs. Ta Ya Electric | Hong Tai vs. Hua Eng Wire | Hong Tai vs. Walsin Lihwa Corp | Hong Tai vs. Sampo Corp |
Check out your portfolio center.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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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