Correlation Between Simple Mart and Hi Sharp
Can any of the company-specific risk be diversified away by investing in both Simple Mart and Hi Sharp 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 Simple Mart and Hi Sharp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simple Mart Retail and Hi Sharp Electronics, you can compare the effects of market volatilities on Simple Mart and Hi Sharp 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 Simple Mart with a short position of Hi Sharp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simple Mart and Hi Sharp.
Diversification Opportunities for Simple Mart and Hi Sharp
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Simple and 3128 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and Hi Sharp Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Sharp Electronics and Simple Mart 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 Simple Mart Retail are associated (or correlated) with Hi Sharp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Sharp Electronics has no effect on the direction of Simple Mart i.e., Simple Mart and Hi Sharp go up and down completely randomly.
Pair Corralation between Simple Mart and Hi Sharp
Assuming the 90 days trading horizon Simple Mart Retail is expected to under-perform the Hi Sharp. In addition to that, Simple Mart is 1.27 times more volatile than Hi Sharp Electronics. It trades about -0.03 of its total potential returns per unit of risk. Hi Sharp Electronics is currently generating about 0.12 per unit of volatility. If you would invest 2,745 in Hi Sharp Electronics on November 2, 2024 and sell it today you would earn a total of 50.00 from holding Hi Sharp Electronics or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simple Mart Retail vs. Hi Sharp Electronics
Performance |
| Timeline |
| Simple Mart Retail |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hi Sharp Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Simple Mart and Hi Sharp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simple Mart and Hi Sharp
The main advantage of trading using opposite Simple Mart and Hi Sharp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simple Mart position performs unexpectedly, Hi Sharp 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 Hi Sharp will offset losses from the drop in Hi Sharp's long position.The idea behind Simple Mart Retail and Hi Sharp Electronics 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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