Correlation Between Eclat Textile and Hiwin Mikrosystem

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

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

Diversification Opportunities for Eclat Textile and Hiwin Mikrosystem

0.22

Correlation Coefficient

Eclat Textile  Hiwin Mikrosystem

Modest diversification

The 3 months correlation between Eclat and Hiwin is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eclat Textile Co and Hiwin Mikrosystem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiwin Mikrosystem Corp and Eclat Textile 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 Eclat Textile Co are associated (or correlated) with Hiwin Mikrosystem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiwin Mikrosystem Corp has no effect on the direction of Eclat Textile i.e., Eclat Textile and Hiwin Mikrosystem go up and down completely randomly.

Pair Corralation between Eclat Textile and Hiwin Mikrosystem

Assuming the 90 days trading horizon Eclat Textile is expected to generate 3.22 times less return on investment than Hiwin Mikrosystem. But when comparing it to its historical volatility, Eclat Textile Co is 2.3 times less risky than Hiwin Mikrosystem. It trades about 0.05 of its potential returns per unit of risk. Hiwin Mikrosystem Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,150  in Hiwin Mikrosystem Corp on September 4, 2024 and sell it today you would earn a total of  1,500  from holding Hiwin Mikrosystem Corp or generate 14.78% return on investment over 90 days.

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

Eclat Textile Co  vs.  Hiwin Mikrosystem Corp

Eclat Textile

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eclat Textile Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Eclat Textile is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hiwin Mikrosystem Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hiwin Mikrosystem Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hiwin Mikrosystem showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eclat Textile and Hiwin Mikrosystem

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

The idea behind Eclat Textile Co and Hiwin Mikrosystem 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.