Correlation Between Solution Advanced and HLB Power
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and HLB Power 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 Solution Advanced and HLB Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and HLB Power Co, you can compare the effects of market volatilities on Solution Advanced and HLB Power 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 Solution Advanced with a short position of HLB Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and HLB Power.
Diversification Opportunities for Solution Advanced and HLB Power
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solution and HLB is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and HLB Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLB Power and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with HLB Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLB Power has no effect on the direction of Solution Advanced i.e., Solution Advanced and HLB Power go up and down completely randomly.
Pair Corralation between Solution Advanced and HLB Power
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 0.93 times more return on investment than HLB Power. However, Solution Advanced Technology is 1.07 times less risky than HLB Power. It trades about -0.02 of its potential returns per unit of risk. HLB Power Co is currently generating about -0.03 per unit of risk. If you would invest 280,868 in Solution Advanced Technology on September 14, 2024 and sell it today you would lose (139,468) from holding Solution Advanced Technology or give up 49.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Solution Advanced Technology vs. HLB Power Co
Performance |
| Timeline |
| Solution Advanced |
| HLB Power |
Solution Advanced and HLB Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and HLB Power
The main advantage of trading using opposite Solution Advanced and HLB Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, HLB Power 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 HLB Power will offset losses from the drop in HLB Power's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| HLB Power vs. Korea New Network | HLB Power vs. Solution Advanced Technology | HLB Power vs. Busan Industrial Co | HLB Power vs. Busan Ind |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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