Correlation Between Hoshine Silicon and Huaibei Mining

Can any of the company-specific risk be diversified away by investing in both Hoshine Silicon and Huaibei Mining 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 Hoshine Silicon and Huaibei Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hoshine Silicon Ind and Huaibei Mining Holdings, you can compare the effects of market volatilities on Hoshine Silicon and Huaibei Mining 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 Hoshine Silicon with a short position of Huaibei Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hoshine Silicon and Huaibei Mining.

Diversification Opportunities for Hoshine Silicon and Huaibei Mining

0.59

Correlation Coefficient

Hoshine Silicon  Huaibei Mining

Very weak diversification

The 3 months correlation between Hoshine and Huaibei is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hoshine Silicon Ind and Huaibei Mining Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaibei Mining Holdings and Hoshine Silicon 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 Hoshine Silicon Ind are associated (or correlated) with Huaibei Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaibei Mining Holdings has no effect on the direction of Hoshine Silicon i.e., Hoshine Silicon and Huaibei Mining go up and down completely randomly.

Pair Corralation between Hoshine Silicon and Huaibei Mining

Assuming the 90 days trading horizon Hoshine Silicon Ind is expected to generate 1.11 times more return on investment than Huaibei Mining. However, Hoshine Silicon is 1.11 times more volatile than Huaibei Mining Holdings. It trades about 0.1 of its potential returns per unit of risk. Huaibei Mining Holdings is currently generating about -0.22 per unit of risk. If you would invest  5,719  in Hoshine Silicon Ind on September 2, 2024 and sell it today you would earn a total of  191.00  from holding Hoshine Silicon Ind or generate 3.34% return on investment over 90 days.

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

Hoshine Silicon Ind  vs.  Huaibei Mining Holdings

Hoshine Silicon Ind

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hoshine Silicon Ind are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hoshine Silicon sustained solid returns over the last few months and may actually be approaching a breakup point.

Huaibei Mining Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Huaibei Mining Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Huaibei Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hoshine Silicon and Huaibei Mining

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

The idea behind Hoshine Silicon Ind and Huaibei Mining Holdings 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.