Correlation Between HiTi Digital and AOPEN
Can any of the company-specific risk be diversified away by investing in both HiTi Digital and AOPEN 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 HiTi Digital and AOPEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HiTi Digital and AOPEN Inc, you can compare the effects of market volatilities on HiTi Digital and AOPEN 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 HiTi Digital with a short position of AOPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of HiTi Digital and AOPEN.
Diversification Opportunities for HiTi Digital and AOPEN
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HiTi and AOPEN is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding HiTi Digital and AOPEN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOPEN Inc and HiTi Digital 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 HiTi Digital are associated (or correlated) with AOPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOPEN Inc has no effect on the direction of HiTi Digital i.e., HiTi Digital and AOPEN go up and down completely randomly.
Pair Corralation between HiTi Digital and AOPEN
Assuming the 90 days trading horizon HiTi Digital is expected to generate 19.23 times more return on investment than AOPEN. However, HiTi Digital is 19.23 times more volatile than AOPEN Inc. It trades about 0.2 of its potential returns per unit of risk. AOPEN Inc is currently generating about 0.06 per unit of risk. If you would invest 798.00 in HiTi Digital on September 1, 2024 and sell it today you would earn a total of 812.00 from holding HiTi Digital or generate 101.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
HiTi Digital vs. AOPEN Inc
Performance |
| Timeline |
| HiTi Digital |
| AOPEN Inc |
HiTi Digital and AOPEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HiTi Digital and AOPEN
The main advantage of trading using opposite HiTi Digital and AOPEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HiTi Digital position performs unexpectedly, AOPEN 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 AOPEN will offset losses from the drop in AOPEN's long position.The idea behind HiTi Digital and AOPEN Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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