Correlation Between Hota Industrial and Elan Microelectronics
Can any of the company-specific risk be diversified away by investing in both Hota Industrial and Elan Microelectronics 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 Hota Industrial and Elan Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hota Industrial Mfg and Elan Microelectronics Corp, you can compare the effects of market volatilities on Hota Industrial and Elan Microelectronics 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 Hota Industrial with a short position of Elan Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hota Industrial and Elan Microelectronics.
Diversification Opportunities for Hota Industrial and Elan Microelectronics
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hota and Elan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hota Industrial Mfg and Elan Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elan Microelectronics and Hota Industrial 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 Hota Industrial Mfg are associated (or correlated) with Elan Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elan Microelectronics has no effect on the direction of Hota Industrial i.e., Hota Industrial and Elan Microelectronics go up and down completely randomly.
Pair Corralation between Hota Industrial and Elan Microelectronics
Assuming the 90 days trading horizon Hota Industrial Mfg is expected to generate 1.61 times more return on investment than Elan Microelectronics. However, Hota Industrial is 1.61 times more volatile than Elan Microelectronics Corp. It trades about 0.11 of its potential returns per unit of risk. Elan Microelectronics Corp is currently generating about -0.05 per unit of risk. If you would invest 5,580 in Hota Industrial Mfg on August 31, 2024 and sell it today you would earn a total of 450.00 from holding Hota Industrial Mfg or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hota Industrial Mfg vs. Elan Microelectronics Corp
Performance |
| Timeline |
| Hota Industrial Mfg |
| Elan Microelectronics |
Hota Industrial and Elan Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hota Industrial and Elan Microelectronics
The main advantage of trading using opposite Hota Industrial and Elan Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hota Industrial position performs unexpectedly, Elan Microelectronics 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 Elan Microelectronics will offset losses from the drop in Elan Microelectronics' long position.| Hota Industrial vs. Chaintech Technology Corp | Hota Industrial vs. AVerMedia Technologies | Hota Industrial vs. Avision | Hota Industrial vs. Clevo Co |
| Elan Microelectronics vs. United Microelectronics | Elan Microelectronics vs. Winbond Electronics Corp | Elan Microelectronics vs. Macronix International 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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