Correlation Between Thinking Electronic and Handa Pharmaceuticals

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Can any of the company-specific risk be diversified away by investing in both Thinking Electronic and Handa Pharmaceuticals 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 Thinking Electronic and Handa Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thinking Electronic Industrial and Handa Pharmaceuticals, you can compare the effects of market volatilities on Thinking Electronic and Handa Pharmaceuticals 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 Thinking Electronic with a short position of Handa Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thinking Electronic and Handa Pharmaceuticals.

Diversification Opportunities for Thinking Electronic and Handa Pharmaceuticals

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Thinking and Handa is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Thinking Electronic Industrial and Handa Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Handa Pharmaceuticals and Thinking Electronic 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 Thinking Electronic Industrial are associated (or correlated) with Handa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Handa Pharmaceuticals has no effect on the direction of Thinking Electronic i.e., Thinking Electronic and Handa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Thinking Electronic and Handa Pharmaceuticals

Assuming the 90 days trading horizon Thinking Electronic Industrial is expected to generate 0.61 times more return on investment than Handa Pharmaceuticals. However, Thinking Electronic Industrial is 1.63 times less risky than Handa Pharmaceuticals. It trades about 0.31 of its potential returns per unit of risk. Handa Pharmaceuticals is currently generating about 0.03 per unit of risk. If you would invest  14,950  in Thinking Electronic Industrial on November 4, 2024 and sell it today you would earn a total of  1,450  from holding Thinking Electronic Industrial or generate 9.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Thinking Electronic Industrial  vs.  Handa Pharmaceuticals

 Performance 
       Timeline  
Thinking Electronic 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Thinking Electronic Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Thinking Electronic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Handa Pharmaceuticals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
OK
Over the last 90 days Handa Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Handa Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Thinking Electronic and Handa Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thinking Electronic and Handa Pharmaceuticals

The main advantage of trading using opposite Thinking Electronic and Handa Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thinking Electronic position performs unexpectedly, Handa Pharmaceuticals 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 Handa Pharmaceuticals will offset losses from the drop in Handa Pharmaceuticals' long position.
The idea behind Thinking Electronic Industrial and Handa Pharmaceuticals 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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