Correlation Between SillaJen and Hugel

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

By analyzing existing cross correlation between SillaJen and Hugel Inc, you can compare the effects of market volatilities on SillaJen and Hugel 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 SillaJen with a short position of Hugel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SillaJen and Hugel.

Diversification Opportunities for SillaJen and Hugel

-0.19

Correlation Coefficient

SillaJen  Hugel

Good diversification

The 3 months correlation between SillaJen and Hugel is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SillaJen and Hugel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hugel Inc and SillaJen 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 SillaJen are associated (or correlated) with Hugel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hugel Inc has no effect on the direction of SillaJen i.e., SillaJen and Hugel go up and down completely randomly.

Pair Corralation between SillaJen and Hugel

Assuming the 90 days trading horizon SillaJen is expected to generate 0.81 times more return on investment than Hugel. However, SillaJen is 1.23 times less risky than Hugel. It trades about 0.08 of its potential returns per unit of risk. Hugel Inc is currently generating about 0.04 per unit of risk. If you would invest  290,000  in SillaJen on September 3, 2024 and sell it today you would earn a total of  34,500  from holding SillaJen or generate 11.9% return on investment over 90 days.

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

SillaJen  vs.  Hugel Inc

SillaJen

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SillaJen are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SillaJen sustained solid returns over the last few months and may actually be approaching a breakup point.

Hugel Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hugel Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hugel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SillaJen and Hugel

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

The idea behind SillaJen and Hugel Inc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.