Correlation Between Simple Mart and HIM International
Can any of the company-specific risk be diversified away by investing in both Simple Mart and HIM International 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 HIM International 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 HIM International Music, you can compare the effects of market volatilities on Simple Mart and HIM International 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 HIM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simple Mart and HIM International.
Diversification Opportunities for Simple Mart and HIM International
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Simple and HIM is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and HIM International Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIM International Music 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 HIM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIM International Music has no effect on the direction of Simple Mart i.e., Simple Mart and HIM International go up and down completely randomly.
Pair Corralation between Simple Mart and HIM International
Assuming the 90 days trading horizon Simple Mart is expected to generate 4.46 times less return on investment than HIM International. But when comparing it to its historical volatility, Simple Mart Retail is 1.03 times less risky than HIM International. It trades about 0.02 of its potential returns per unit of risk. HIM International Music is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,728 in HIM International Music on September 14, 2024 and sell it today you would earn a total of 2,472 from holding HIM International Music or generate 25.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simple Mart Retail vs. HIM International Music
Performance |
| Timeline |
| Simple Mart Retail |
| HIM International Music |
Simple Mart and HIM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simple Mart and HIM International
The main advantage of trading using opposite Simple Mart and HIM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simple Mart position performs unexpectedly, HIM International 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 HIM International will offset losses from the drop in HIM International's long position.| Simple Mart vs. Taiwan Semiconductor Manufacturing | Simple Mart vs. Hon Hai Precision | Simple Mart vs. MediaTek | Simple Mart vs. Chunghwa Telecom Co |
| HIM International vs. Elite Semiconductor Memory | HIM International vs. Vanguard International Semiconductor | HIM International vs. Simple Mart Retail | HIM International vs. Mospec Semiconductor 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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