Correlation Between Higher Way and Simple Mart
Can any of the company-specific risk be diversified away by investing in both Higher Way and Simple Mart 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 Higher Way and Simple Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Higher Way Electronic and Simple Mart Retail, you can compare the effects of market volatilities on Higher Way and Simple Mart 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 Higher Way with a short position of Simple Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Higher Way and Simple Mart.
Diversification Opportunities for Higher Way and Simple Mart
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Higher and Simple is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Higher Way Electronic and Simple Mart Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simple Mart Retail and Higher Way 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 Higher Way Electronic are associated (or correlated) with Simple Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simple Mart Retail has no effect on the direction of Higher Way i.e., Higher Way and Simple Mart go up and down completely randomly.
Pair Corralation between Higher Way and Simple Mart
Assuming the 90 days trading horizon Higher Way Electronic is expected to under-perform the Simple Mart. In addition to that, Higher Way is 1.89 times more volatile than Simple Mart Retail. It trades about -0.36 of its total potential returns per unit of risk. Simple Mart Retail is currently generating about -0.1 per unit of volatility. If you would invest 3,995 in Simple Mart Retail on October 25, 2024 and sell it today you would lose (105.00) from holding Simple Mart Retail or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Higher Way Electronic vs. Simple Mart Retail
Performance |
| Timeline |
| Higher Way Electronic |
| Simple Mart Retail |
Higher Way and Simple Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Higher Way and Simple Mart
The main advantage of trading using opposite Higher Way and Simple Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Higher Way position performs unexpectedly, Simple Mart 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 Simple Mart will offset losses from the drop in Simple Mart's long position.| Higher Way vs. Simple Mart Retail | Higher Way vs. Farglory FTZ Investment | Higher Way vs. Mechema Chemicals Int | Higher Way vs. Tang Eng Iron |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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