Correlation Between Hiwin Mikrosystem and BH Global

Can any of the company-specific risk be diversified away by investing in both Hiwin Mikrosystem and BH Global 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 Hiwin Mikrosystem and BH Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hiwin Mikrosystem Corp and BH Global, you can compare the effects of market volatilities on Hiwin Mikrosystem and BH Global 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 Hiwin Mikrosystem with a short position of BH Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hiwin Mikrosystem and BH Global.

Diversification Opportunities for Hiwin Mikrosystem and BH Global

0.8

Correlation Coefficient

Hiwin Mikrosystem  BH Global

Very poor diversification

The 3 months correlation between Hiwin and 911608 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hiwin Mikrosystem Corp and BH Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Global and Hiwin Mikrosystem 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 Hiwin Mikrosystem Corp are associated (or correlated) with BH Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Global has no effect on the direction of Hiwin Mikrosystem i.e., Hiwin Mikrosystem and BH Global go up and down completely randomly.

Pair Corralation between Hiwin Mikrosystem and BH Global

Assuming the 90 days trading horizon Hiwin Mikrosystem Corp is expected to under-perform the BH Global. But the stock apears to be less risky and, when comparing its historical volatility, Hiwin Mikrosystem Corp is 1.04 times less risky than BH Global. The stock trades about -0.24 of its potential returns per unit of risk. The BH Global is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  350.00  in BH Global on January 30, 2024 and sell it today you would lose (7.00) from holding BH Global or give up 2.0% of portfolio value over 90 days.

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

Hiwin Mikrosystem Corp  vs.  BH Global

Hiwin Mikrosystem Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hiwin Mikrosystem Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hiwin Mikrosystem showed solid returns over the last few months and may actually be approaching a breakup point.

BH Global

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BH Global are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, BH Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hiwin Mikrosystem and BH Global

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

The idea behind Hiwin Mikrosystem Corp and BH Global 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.