Correlation Between Gigastorage Corp and Hitron Technologies
Can any of the company-specific risk be diversified away by investing in both Gigastorage Corp and Hitron Technologies 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 Gigastorage Corp and Hitron Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gigastorage Corp and Hitron Technologies, you can compare the effects of market volatilities on Gigastorage Corp and Hitron Technologies 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 Gigastorage Corp with a short position of Hitron Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gigastorage Corp and Hitron Technologies.
Diversification Opportunities for Gigastorage Corp and Hitron Technologies
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gigastorage and Hitron is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Gigastorage Corp and Hitron Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitron Technologies and Gigastorage Corp 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 Gigastorage Corp are associated (or correlated) with Hitron Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitron Technologies has no effect on the direction of Gigastorage Corp i.e., Gigastorage Corp and Hitron Technologies go up and down completely randomly.
Pair Corralation between Gigastorage Corp and Hitron Technologies
Assuming the 90 days trading horizon Gigastorage Corp is expected to under-perform the Hitron Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Gigastorage Corp is 1.25 times less risky than Hitron Technologies. The stock trades about -0.02 of its potential returns per unit of risk. The Hitron Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,620 in Hitron Technologies on November 5, 2024 and sell it today you would earn a total of 250.00 from holding Hitron Technologies or generate 9.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gigastorage Corp vs. Hitron Technologies
Performance |
| Timeline |
| Gigastorage Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hitron Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Gigastorage Corp and Hitron Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gigastorage Corp and Hitron Technologies
The main advantage of trading using opposite Gigastorage Corp and Hitron Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gigastorage Corp position performs unexpectedly, Hitron Technologies 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 Hitron Technologies will offset losses from the drop in Hitron Technologies' long position.The idea behind Gigastorage Corp and Hitron Technologies 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.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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