Correlation Between HB Technology and LEADCORP
Can any of the company-specific risk be diversified away by investing in both HB Technology and LEADCORP 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 HB Technology and LEADCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HB Technology TD and The LEADCORP, you can compare the effects of market volatilities on HB Technology and LEADCORP 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 HB Technology with a short position of LEADCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of HB Technology and LEADCORP.
Diversification Opportunities for HB Technology and LEADCORP
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 078150 and LEADCORP is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding HB Technology TD and The LEADCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEADCORP and HB Technology 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 HB Technology TD are associated (or correlated) with LEADCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEADCORP has no effect on the direction of HB Technology i.e., HB Technology and LEADCORP go up and down completely randomly.
Pair Corralation between HB Technology and LEADCORP
Assuming the 90 days trading horizon HB Technology TD is expected to under-perform the LEADCORP. In addition to that, HB Technology is 4.05 times more volatile than The LEADCORP. It trades about -0.24 of its total potential returns per unit of risk. The LEADCORP is currently generating about -0.13 per unit of volatility. If you would invest 435,500 in The LEADCORP on September 3, 2024 and sell it today you would lose (10,000) from holding The LEADCORP or give up 2.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HB Technology TD vs. The LEADCORP
Performance |
| Timeline |
| HB Technology TD |
| LEADCORP |
HB Technology and LEADCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HB Technology and LEADCORP
The main advantage of trading using opposite HB Technology and LEADCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HB Technology position performs unexpectedly, LEADCORP 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 LEADCORP will offset losses from the drop in LEADCORP's long position.| HB Technology vs. Dongsin Engineering Construction | HB Technology vs. Doosan Fuel Cell | HB Technology vs. Daishin Balance 1 | HB Technology vs. Total Soft Bank |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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