Correlation Between High Tech and Sam A
Can any of the company-specific risk be diversified away by investing in both High Tech and Sam A 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 High Tech and Sam A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Tech Pharm and Sam A Pharm Co, you can compare the effects of market volatilities on High Tech and Sam A 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 High Tech with a short position of Sam A. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Tech and Sam A.
Diversification Opportunities for High Tech and Sam A
Good diversification
The 3 months correlation between High and Sam is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding High Tech Pharm and Sam A Pharm Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam A Pharm and High Tech 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 High Tech Pharm are associated (or correlated) with Sam A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam A Pharm has no effect on the direction of High Tech i.e., High Tech and Sam A go up and down completely randomly.
Pair Corralation between High Tech and Sam A
Assuming the 90 days trading horizon High Tech Pharm is expected to generate 0.85 times more return on investment than Sam A. However, High Tech Pharm is 1.17 times less risky than Sam A. It trades about 0.07 of its potential returns per unit of risk. Sam A Pharm Co is currently generating about 0.01 per unit of risk. If you would invest 845,821 in High Tech Pharm on August 31, 2024 and sell it today you would earn a total of 563,179 from holding High Tech Pharm or generate 66.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
High Tech Pharm vs. Sam A Pharm Co
Performance |
| Timeline |
| High Tech Pharm |
| Sam A Pharm |
High Tech and Sam A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Tech and Sam A
The main advantage of trading using opposite High Tech and Sam A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Tech position performs unexpectedly, Sam A 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 Sam A will offset losses from the drop in Sam A's long position.| High Tech vs. Sungchang Autotech Co | High Tech vs. Raontech | High Tech vs. Orbitech Co | High Tech vs. Solution Advanced Technology |
| Sam A vs. Kolon Life Science | Sam A vs. JETEMA Co | Sam A vs. Aminologics CoLtd | Sam A vs. Daihan Pharmaceutical CoLtd |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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