Correlation Between Huang Hsiang and Asia Tech

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

By analyzing existing cross correlation between Huang Hsiang Construction and Asia Tech Image, you can compare the effects of market volatilities on Huang Hsiang and Asia Tech 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 Huang Hsiang with a short position of Asia Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huang Hsiang and Asia Tech.

Diversification Opportunities for Huang Hsiang and Asia Tech

-0.71

Correlation Coefficient

Huang Hsiang  Asia Tech

Pay attention - limited upside

The 3 months correlation between Huang and Asia is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Huang Hsiang Construction and Asia Tech Image in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Tech Image and Huang Hsiang 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 Huang Hsiang Construction are associated (or correlated) with Asia Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Tech Image has no effect on the direction of Huang Hsiang i.e., Huang Hsiang and Asia Tech go up and down completely randomly.

Pair Corralation between Huang Hsiang and Asia Tech

Assuming the 90 days trading horizon Huang Hsiang Construction is expected to under-perform the Asia Tech. In addition to that, Huang Hsiang is 1.04 times more volatile than Asia Tech Image. It trades about -0.3 of its total potential returns per unit of risk. Asia Tech Image is currently generating about 0.25 per unit of volatility. If you would invest  9,120  in Asia Tech Image on September 26, 2024 and sell it today you would earn a total of  1,430  from holding Asia Tech Image or generate 15.68% return on investment over 90 days.

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

Huang Hsiang Construction  vs.  Asia Tech Image

Huang Hsiang Construction

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Huang Hsiang Construction are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Huang Hsiang showed solid returns over the last few months and may actually be approaching a breakup point.

Asia Tech Image

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Tech Image has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Asia Tech 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 Huang Hsiang and Asia Tech

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

The idea behind Huang Hsiang Construction and Asia Tech Image 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.