Correlation Between Hsinli Chemical and San Fu

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

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

Diversification Opportunities for Hsinli Chemical and San Fu

0.19

Correlation Coefficient

Hsinli Chemical  San Fu

Average diversification

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

Pair Corralation between Hsinli Chemical and San Fu

Assuming the 90 days trading horizon Hsinli Chemical Industrial is expected to generate 1.21 times more return on investment than San Fu. However, Hsinli Chemical is 1.21 times more volatile than San Fu Chemical. It trades about 0.05 of its potential returns per unit of risk. San Fu Chemical is currently generating about 0.03 per unit of risk. If you would invest  4,470  in Hsinli Chemical Industrial on September 14, 2024 and sell it today you would earn a total of  325.00  from holding Hsinli Chemical Industrial or generate 7.27% return on investment over 90 days.

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

Hsinli Chemical Industrial  vs.  San Fu Chemical

Hsinli Chemical Indu

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hsinli Chemical Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hsinli Chemical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

San Fu Chemical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in San Fu Chemical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, San Fu 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 Hsinli Chemical and San Fu

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

The idea behind Hsinli Chemical Industrial and San Fu Chemical 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.