Correlation Between Hong Yi and Chaintech Technology

Can any of the company-specific risk be diversified away by investing in both Hong Yi and Chaintech Technology 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 Hong Yi and Chaintech Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hong Yi Fiber and Chaintech Technology Corp, you can compare the effects of market volatilities on Hong Yi and Chaintech Technology 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 Hong Yi with a short position of Chaintech Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Yi and Chaintech Technology.

Diversification Opportunities for Hong Yi and Chaintech Technology

0.46

Correlation Coefficient

Hong Yi  Chaintech Technology

Very weak diversification

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

Pair Corralation between Hong Yi and Chaintech Technology

Assuming the 90 days trading horizon Hong Yi Fiber is expected to generate 0.22 times more return on investment than Chaintech Technology. However, Hong Yi Fiber is 4.46 times less risky than Chaintech Technology. It trades about -0.13 of its potential returns per unit of risk. Chaintech Technology Corp is currently generating about -0.04 per unit of risk. If you would invest  1,710  in Hong Yi Fiber on September 1, 2024 and sell it today you would lose (110.00) from holding Hong Yi Fiber or give up 6.43% of portfolio value over 90 days.

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

Hong Yi Fiber  vs.  Chaintech Technology Corp

Hong Yi Fiber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hong Yi Fiber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Chaintech Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chaintech Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Hong Yi and Chaintech Technology

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

The idea behind Hong Yi Fiber and Chaintech Technology Corp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.