Correlation Between Parade Technologies and Harmony Electronics
Can any of the company-specific risk be diversified away by investing in both Parade Technologies and Harmony Electronics 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 Parade Technologies and Harmony Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parade Technologies and Harmony Electronics, you can compare the effects of market volatilities on Parade Technologies and Harmony Electronics 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 Parade Technologies with a short position of Harmony Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parade Technologies and Harmony Electronics.
Diversification Opportunities for Parade Technologies and Harmony Electronics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parade and Harmony is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Parade Technologies and Harmony Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Electronics and Parade Technologies 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 Parade Technologies are associated (or correlated) with Harmony Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Electronics has no effect on the direction of Parade Technologies i.e., Parade Technologies and Harmony Electronics go up and down completely randomly.
Pair Corralation between Parade Technologies and Harmony Electronics
Assuming the 90 days trading horizon Parade Technologies is expected to generate 1.46 times less return on investment than Harmony Electronics. In addition to that, Parade Technologies is 1.99 times more volatile than Harmony Electronics. It trades about 0.01 of its total potential returns per unit of risk. Harmony Electronics is currently generating about 0.03 per unit of volatility. If you would invest 3,004 in Harmony Electronics on August 28, 2024 and sell it today you would earn a total of 431.00 from holding Harmony Electronics or generate 14.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parade Technologies vs. Harmony Electronics
Performance |
| Timeline |
| Parade Technologies |
| Harmony Electronics |
Parade Technologies and Harmony Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parade Technologies and Harmony Electronics
The main advantage of trading using opposite Parade Technologies and Harmony Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parade Technologies position performs unexpectedly, Harmony Electronics 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 Harmony Electronics will offset losses from the drop in Harmony Electronics' long position.| Parade Technologies vs. Global Unichip Corp | Parade Technologies vs. Asmedia Technology | Parade Technologies vs. Unimicron Technology Corp | Parade Technologies vs. Novatek Microelectronics Corp |
| Harmony Electronics vs. Integrated Service Technology | Harmony Electronics vs. ASE Industrial Holding | Harmony Electronics vs. eMemory Technology | Harmony Electronics vs. King Yuan Electronics |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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