Correlation Between Hannstar Display and Altek Corp
Can any of the company-specific risk be diversified away by investing in both Hannstar Display and Altek Corp 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 Hannstar Display and Altek Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannstar Display Corp and Altek Corp, you can compare the effects of market volatilities on Hannstar Display and Altek Corp 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 Hannstar Display with a short position of Altek Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannstar Display and Altek Corp.
Diversification Opportunities for Hannstar Display and Altek Corp
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hannstar and Altek is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hannstar Display Corp and Altek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altek Corp and Hannstar Display 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 Hannstar Display Corp are associated (or correlated) with Altek Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altek Corp has no effect on the direction of Hannstar Display i.e., Hannstar Display and Altek Corp go up and down completely randomly.
Pair Corralation between Hannstar Display and Altek Corp
Assuming the 90 days trading horizon Hannstar Display Corp is expected to under-perform the Altek Corp. But the stock apears to be less risky and, when comparing its historical volatility, Hannstar Display Corp is 1.55 times less risky than Altek Corp. The stock trades about -0.07 of its potential returns per unit of risk. The Altek Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,700 in Altek Corp on November 5, 2024 and sell it today you would lose (20.00) from holding Altek Corp or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannstar Display Corp vs. Altek Corp
Performance |
| Timeline |
| Hannstar Display Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Altek Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Hannstar Display and Altek Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannstar Display and Altek Corp
The main advantage of trading using opposite Hannstar Display and Altek Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannstar Display position performs unexpectedly, Altek Corp 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 Altek Corp will offset losses from the drop in Altek Corp's long position.The idea behind Hannstar Display Corp and Altek Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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