Correlation Between Huizhou Speed and HanS Laser

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

Diversification Opportunities for Huizhou Speed and HanS Laser

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Huizhou and HanS is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Huizhou Speed Wireless and HanS Laser Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HanS Laser Tech and Huizhou Speed 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 Huizhou Speed Wireless are associated (or correlated) with HanS Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HanS Laser Tech has no effect on the direction of Huizhou Speed i.e., Huizhou Speed and HanS Laser go up and down completely randomly.

Pair Corralation between Huizhou Speed and HanS Laser

Assuming the 90 days trading horizon Huizhou Speed Wireless is expected to under-perform the HanS Laser. In addition to that, Huizhou Speed is 1.61 times more volatile than HanS Laser Tech. It trades about -0.06 of its total potential returns per unit of risk. HanS Laser Tech is currently generating about 0.04 per unit of volatility. If you would invest  2,457  in HanS Laser Tech on October 25, 2024 and sell it today you would earn a total of  115.00  from holding HanS Laser Tech or generate 4.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Huizhou Speed Wireless  vs.  HanS Laser Tech

 Performance 
       Timeline  
Huizhou Speed Wireless 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Huizhou Speed Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
HanS Laser Tech 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in HanS Laser Tech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HanS Laser may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Huizhou Speed and HanS Laser Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Huizhou Speed and HanS Laser

The main advantage of trading using opposite Huizhou Speed and HanS Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huizhou Speed position performs unexpectedly, HanS Laser 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 HanS Laser will offset losses from the drop in HanS Laser's long position.
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The idea behind Huizhou Speed Wireless and HanS Laser Tech 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.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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