Correlation Between HTC Corp and Planet Technology
Can any of the company-specific risk be diversified away by investing in both HTC Corp and Planet Technology 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 HTC Corp and Planet Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HTC Corp and Planet Technology, you can compare the effects of market volatilities on HTC Corp and Planet Technology 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 HTC Corp with a short position of Planet Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of HTC Corp and Planet Technology.
Diversification Opportunities for HTC Corp and Planet Technology
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HTC and Planet is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding HTC Corp and Planet Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Technology and HTC 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 HTC Corp are associated (or correlated) with Planet Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Technology has no effect on the direction of HTC Corp i.e., HTC Corp and Planet Technology go up and down completely randomly.
Pair Corralation between HTC Corp and Planet Technology
Assuming the 90 days trading horizon HTC Corp is expected to generate 2.47 times more return on investment than Planet Technology. However, HTC Corp is 2.47 times more volatile than Planet Technology. It trades about 0.05 of its potential returns per unit of risk. Planet Technology is currently generating about -0.11 per unit of risk. If you would invest 4,400 in HTC Corp on September 1, 2024 and sell it today you would earn a total of 110.00 from holding HTC Corp or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HTC Corp vs. Planet Technology
Performance |
| Timeline |
| HTC Corp |
| Planet Technology |
HTC Corp and Planet Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HTC Corp and Planet Technology
The main advantage of trading using opposite HTC Corp and Planet Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HTC Corp position performs unexpectedly, Planet Technology 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 Planet Technology will offset losses from the drop in Planet Technology's long position.The idea behind HTC Corp and Planet Technology 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.| Planet Technology vs. Accton Technology Corp | Planet Technology vs. HTC Corp | Planet Technology vs. Wistron NeWeb Corp | Planet Technology vs. Arcadyan Technology Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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