Correlation Between Hi Lai and Gourmet Master
Can any of the company-specific risk be diversified away by investing in both Hi Lai and Gourmet Master 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 Hi Lai and Gourmet Master into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hi Lai Foods Co and Gourmet Master Co, you can compare the effects of market volatilities on Hi Lai and Gourmet Master 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 Hi Lai with a short position of Gourmet Master. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Lai and Gourmet Master.
Diversification Opportunities for Hi Lai and Gourmet Master
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 1268 and Gourmet is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hi Lai Foods Co and Gourmet Master Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gourmet Master and Hi Lai 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 Hi Lai Foods Co are associated (or correlated) with Gourmet Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gourmet Master has no effect on the direction of Hi Lai i.e., Hi Lai and Gourmet Master go up and down completely randomly.
Pair Corralation between Hi Lai and Gourmet Master
Assuming the 90 days trading horizon Hi Lai Foods Co is expected to under-perform the Gourmet Master. But the stock apears to be less risky and, when comparing its historical volatility, Hi Lai Foods Co is 3.51 times less risky than Gourmet Master. The stock trades about -0.29 of its potential returns per unit of risk. The Gourmet Master Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 8,880 in Gourmet Master Co on August 24, 2024 and sell it today you would earn a total of 470.00 from holding Gourmet Master Co or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hi Lai Foods Co vs. Gourmet Master Co
Performance |
| Timeline |
| Hi Lai Foods |
| Gourmet Master |
Hi Lai and Gourmet Master Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hi Lai and Gourmet Master
The main advantage of trading using opposite Hi Lai and Gourmet Master positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Lai position performs unexpectedly, Gourmet Master 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 Gourmet Master will offset losses from the drop in Gourmet Master's long position.| Hi Lai vs. Gourmet Master Co | Hi Lai vs. Wowprime Corp | Hi Lai vs. Louisa Professional Coffee | Hi Lai vs. An Shin Food Services |
| Gourmet Master vs. Wowprime Corp | Gourmet Master vs. President Chain Store | Gourmet Master vs. Eclat Textile Co | Gourmet Master vs. Giant Manufacturing Co |
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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