Correlation Between Asia Electronic and Huang Hsiang

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

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

Diversification Opportunities for Asia Electronic and Huang Hsiang

-0.61

Correlation Coefficient

Asia Electronic  Huang Hsiang

Excellent diversification

The 3 months correlation between Asia and Huang is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Asia Electronic Material and Huang Hsiang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huang Hsiang Construction and Asia Electronic 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 Asia Electronic Material are associated (or correlated) with Huang Hsiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huang Hsiang Construction has no effect on the direction of Asia Electronic i.e., Asia Electronic and Huang Hsiang go up and down completely randomly.

Pair Corralation between Asia Electronic and Huang Hsiang

Assuming the 90 days trading horizon Asia Electronic Material is expected to under-perform the Huang Hsiang. But the stock apears to be less risky and, when comparing its historical volatility, Asia Electronic Material is 1.53 times less risky than Huang Hsiang. The stock trades about -0.05 of its potential returns per unit of risk. The Huang Hsiang Construction is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,380  in Huang Hsiang Construction on September 15, 2024 and sell it today you would earn a total of  30.00  from holding Huang Hsiang Construction or generate 0.47% return on investment over 90 days.

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

Asia Electronic Material  vs.  Huang Hsiang Construction

Asia Electronic Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Electronic Material has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Asia Electronic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Huang Hsiang Construction

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Huang Hsiang Construction are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Huang Hsiang 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 Asia Electronic and Huang Hsiang

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

The idea behind Asia Electronic Material and Huang Hsiang Construction 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.