Correlation Between OBI Pharma and Hi Lai
Can any of the company-specific risk be diversified away by investing in both OBI Pharma and Hi Lai 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 OBI Pharma and Hi Lai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBI Pharma and Hi Lai Foods Co, you can compare the effects of market volatilities on OBI Pharma and Hi Lai 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 OBI Pharma with a short position of Hi Lai. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBI Pharma and Hi Lai.
Diversification Opportunities for OBI Pharma and Hi Lai
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OBI and 1268 is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and Hi Lai Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Lai Foods and OBI Pharma 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 OBI Pharma are associated (or correlated) with Hi Lai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Lai Foods has no effect on the direction of OBI Pharma i.e., OBI Pharma and Hi Lai go up and down completely randomly.
Pair Corralation between OBI Pharma and Hi Lai
Assuming the 90 days trading horizon OBI Pharma is expected to under-perform the Hi Lai. In addition to that, OBI Pharma is 3.79 times more volatile than Hi Lai Foods Co. It trades about -0.15 of its total potential returns per unit of risk. Hi Lai Foods Co is currently generating about 0.02 per unit of volatility. If you would invest 15,050 in Hi Lai Foods Co on August 28, 2024 and sell it today you would earn a total of 50.00 from holding Hi Lai Foods Co or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OBI Pharma vs. Hi Lai Foods Co
Performance |
| Timeline |
| OBI Pharma |
| Hi Lai Foods |
OBI Pharma and Hi Lai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBI Pharma and Hi Lai
The main advantage of trading using opposite OBI Pharma and Hi Lai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBI Pharma position performs unexpectedly, Hi Lai 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 Hi Lai will offset losses from the drop in Hi Lai's long position.The idea behind OBI Pharma and Hi Lai Foods Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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