Correlation Between Rainbow Robotics and Haisung TPC
Can any of the company-specific risk be diversified away by investing in both Rainbow Robotics and Haisung TPC 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 Rainbow Robotics and Haisung TPC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rainbow Robotics and Haisung TPC Co, you can compare the effects of market volatilities on Rainbow Robotics and Haisung TPC 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 Rainbow Robotics with a short position of Haisung TPC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rainbow Robotics and Haisung TPC.
Diversification Opportunities for Rainbow Robotics and Haisung TPC
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rainbow and Haisung is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rainbow Robotics and Haisung TPC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haisung TPC and Rainbow Robotics 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 Rainbow Robotics are associated (or correlated) with Haisung TPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haisung TPC has no effect on the direction of Rainbow Robotics i.e., Rainbow Robotics and Haisung TPC go up and down completely randomly.
Pair Corralation between Rainbow Robotics and Haisung TPC
Assuming the 90 days trading horizon Rainbow Robotics is expected to generate 0.86 times more return on investment than Haisung TPC. However, Rainbow Robotics is 1.16 times less risky than Haisung TPC. It trades about 0.09 of its potential returns per unit of risk. Haisung TPC Co is currently generating about 0.02 per unit of risk. If you would invest 3,210,000 in Rainbow Robotics on August 29, 2024 and sell it today you would earn a total of 10,840,000 from holding Rainbow Robotics or generate 337.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rainbow Robotics vs. Haisung TPC Co
Performance |
| Timeline |
| Rainbow Robotics |
| Haisung TPC |
Rainbow Robotics and Haisung TPC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rainbow Robotics and Haisung TPC
The main advantage of trading using opposite Rainbow Robotics and Haisung TPC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rainbow Robotics position performs unexpectedly, Haisung TPC 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 Haisung TPC will offset losses from the drop in Haisung TPC's long position.The idea behind Rainbow Robotics and Haisung TPC 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.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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