Correlation Between Chaintech Technology and Hong Yi

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

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

Diversification Opportunities for Chaintech Technology and Hong Yi

0.46

Correlation Coefficient

Chaintech Technology  Hong Yi

Very weak diversification

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

Pair Corralation between Chaintech Technology and Hong Yi

Assuming the 90 days trading horizon Chaintech Technology Corp is expected to generate 4.42 times more return on investment than Hong Yi. However, Chaintech Technology is 4.42 times more volatile than Hong Yi Fiber. It trades about -0.02 of its potential returns per unit of risk. Hong Yi Fiber is currently generating about -0.13 per unit of risk. If you would invest  4,125  in Chaintech Technology Corp on September 3, 2024 and sell it today you would lose (335.00) from holding Chaintech Technology Corp or give up 8.12% of portfolio value over 90 days.

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

Chaintech Technology Corp  vs.  Hong Yi Fiber

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 fairly stable basic indicators, Chaintech Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 fairly stable basic indicators, Hong Yi 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 Chaintech Technology and Hong Yi

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

The idea behind Chaintech Technology Corp and Hong Yi Fiber 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.