Correlation Between HUA YU and Shinkong Textile

Can any of the company-specific risk be diversified away by investing in both HUA YU and Shinkong Textile 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 HUA YU and Shinkong Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HUA YU LIEN and Shinkong Textile Co, you can compare the effects of market volatilities on HUA YU and Shinkong Textile 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 HUA YU with a short position of Shinkong Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUA YU and Shinkong Textile.

Diversification Opportunities for HUA YU and Shinkong Textile

0.0

Correlation Coefficient

HUA YU  Shinkong Textile

Pay attention - limited upside

The 3 months correlation between HUA and Shinkong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HUA YU LIEN and Shinkong Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Textile and HUA YU 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 HUA YU LIEN are associated (or correlated) with Shinkong Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Textile has no effect on the direction of HUA YU i.e., HUA YU and Shinkong Textile go up and down completely randomly.

Pair Corralation between HUA YU and Shinkong Textile

If you would invest  4,610  in Shinkong Textile Co on September 4, 2024 and sell it today you would earn a total of  30.00  from holding Shinkong Textile Co or generate 0.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

HUA YU LIEN  vs.  Shinkong Textile Co

HUA YU LIEN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUA YU LIEN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, HUA YU is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Shinkong Textile

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shinkong Textile Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Shinkong Textile is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HUA YU and Shinkong Textile

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

The idea behind HUA YU LIEN and Shinkong Textile Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.