Correlation Between Hannstar Display and Allied Industrial
Can any of the company-specific risk be diversified away by investing in both Hannstar Display and Allied Industrial 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 Allied Industrial 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 Allied Industrial, you can compare the effects of market volatilities on Hannstar Display and Allied Industrial 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 Allied Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannstar Display and Allied Industrial.
Diversification Opportunities for Hannstar Display and Allied Industrial
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hannstar and Allied is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hannstar Display Corp and Allied Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Industrial 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 Allied Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Industrial has no effect on the direction of Hannstar Display i.e., Hannstar Display and Allied Industrial go up and down completely randomly.
Pair Corralation between Hannstar Display and Allied Industrial
Assuming the 90 days trading horizon Hannstar Display Corp is expected to generate 0.71 times more return on investment than Allied Industrial. However, Hannstar Display Corp is 1.42 times less risky than Allied Industrial. It trades about -0.02 of its potential returns per unit of risk. Allied Industrial is currently generating about -0.27 per unit of risk. If you would invest 805.00 in Hannstar Display Corp on November 3, 2024 and sell it today you would lose (5.00) from holding Hannstar Display Corp or give up 0.62% 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. Allied Industrial
Performance |
| Timeline |
| Hannstar Display Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Allied Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hannstar Display and Allied Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannstar Display and Allied Industrial
The main advantage of trading using opposite Hannstar Display and Allied Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannstar Display position performs unexpectedly, Allied Industrial 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 Allied Industrial will offset losses from the drop in Allied Industrial's long position.The idea behind Hannstar Display Corp and Allied Industrial 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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