Correlation Between Hsinli Chemical and Ingentec

Can any of the company-specific risk be diversified away by investing in both Hsinli Chemical and Ingentec 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 Ingentec 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 Ingentec, you can compare the effects of market volatilities on Hsinli Chemical and Ingentec 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 Ingentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsinli Chemical and Ingentec.

Diversification Opportunities for Hsinli Chemical and Ingentec

-0.42

Correlation Coefficient

Hsinli Chemical  Ingentec

Very good diversification

The 3 months correlation between Hsinli and Ingentec is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hsinli Chemical Industrial and Ingentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingentec 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 Ingentec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingentec has no effect on the direction of Hsinli Chemical i.e., Hsinli Chemical and Ingentec go up and down completely randomly.

Pair Corralation between Hsinli Chemical and Ingentec

Assuming the 90 days trading horizon Hsinli Chemical Industrial is expected to generate 1.52 times more return on investment than Ingentec. However, Hsinli Chemical is 1.52 times more volatile than Ingentec. It trades about 0.03 of its potential returns per unit of risk. Ingentec is currently generating about -0.25 per unit of risk. If you would invest  4,715  in Hsinli Chemical Industrial on September 23, 2024 and sell it today you would earn a total of  160.00  from holding Hsinli Chemical Industrial or generate 3.39% return on investment over 90 days.

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

Hsinli Chemical Industrial  vs.  Ingentec

Hsinli Chemical Indu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hsinli Chemical Industrial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hsinli Chemical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ingentec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ingentec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Hsinli Chemical and Ingentec

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

The idea behind Hsinli Chemical Industrial and Ingentec 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.