Correlation Between Hi Lai and Tradetool Auto
Can any of the company-specific risk be diversified away by investing in both Hi Lai and Tradetool Auto 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 Tradetool Auto 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 Tradetool Auto Co, you can compare the effects of market volatilities on Hi Lai and Tradetool Auto 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 Tradetool Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Lai and Tradetool Auto.
Diversification Opportunities for Hi Lai and Tradetool Auto
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 1268 and Tradetool is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hi Lai Foods Co and Tradetool Auto Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradetool Auto 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 Tradetool Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradetool Auto has no effect on the direction of Hi Lai i.e., Hi Lai and Tradetool Auto go up and down completely randomly.
Pair Corralation between Hi Lai and Tradetool Auto
Assuming the 90 days trading horizon Hi Lai Foods Co is expected to generate 0.5 times more return on investment than Tradetool Auto. However, Hi Lai Foods Co is 1.99 times less risky than Tradetool Auto. It trades about -0.02 of its potential returns per unit of risk. Tradetool Auto Co is currently generating about -0.12 per unit of risk. If you would invest 15,771 in Hi Lai Foods Co on October 26, 2024 and sell it today you would lose (521.00) from holding Hi Lai Foods Co or give up 3.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hi Lai Foods Co vs. Tradetool Auto Co
Performance |
| Timeline |
| Hi Lai Foods |
| Tradetool Auto |
Hi Lai and Tradetool Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hi Lai and Tradetool Auto
The main advantage of trading using opposite Hi Lai and Tradetool Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Lai position performs unexpectedly, Tradetool Auto 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 Tradetool Auto will offset losses from the drop in Tradetool Auto's long position.The idea behind Hi Lai Foods Co and Tradetool Auto Co 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.| Tradetool Auto vs. Hi Lai Foods Co | Tradetool Auto vs. Standard Foods Corp | Tradetool Auto vs. Cameo Communications | Tradetool Auto vs. Wei Chuan Foods |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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