Correlation Between Highlight Tech and Information Technology
Can any of the company-specific risk be diversified away by investing in both Highlight Tech and Information Technology 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 Highlight Tech and Information Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highlight Tech and Information Technology Total, you can compare the effects of market volatilities on Highlight Tech and Information Technology 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 Highlight Tech with a short position of Information Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Tech and Information Technology.
Diversification Opportunities for Highlight Tech and Information Technology
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Highlight and Information is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Tech and Information Technology Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Technology and Highlight Tech 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 Highlight Tech are associated (or correlated) with Information Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Technology has no effect on the direction of Highlight Tech i.e., Highlight Tech and Information Technology go up and down completely randomly.
Pair Corralation between Highlight Tech and Information Technology
Assuming the 90 days trading horizon Highlight Tech is expected to generate 1.33 times more return on investment than Information Technology. However, Highlight Tech is 1.33 times more volatile than Information Technology Total. It trades about 0.03 of its potential returns per unit of risk. Information Technology Total is currently generating about -0.01 per unit of risk. If you would invest 4,820 in Highlight Tech on September 3, 2024 and sell it today you would earn a total of 540.00 from holding Highlight Tech or generate 11.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Tech vs. Information Technology Total
Performance |
| Timeline |
| Highlight Tech |
| Information Technology |
Highlight Tech and Information Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Tech and Information Technology
The main advantage of trading using opposite Highlight Tech and Information Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Tech position performs unexpectedly, Information Technology 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 Information Technology will offset losses from the drop in Information Technology's long position.| Highlight Tech vs. WiseChip Semiconductor | Highlight Tech vs. Novatek Microelectronics Corp | Highlight Tech vs. Leader Electronics | Highlight Tech vs. Information Technology Total |
| Information Technology vs. Digital China Holdings | Information Technology vs. Acer E Enabling Service | Information Technology vs. Sysage Technology Co | Information Technology vs. Green World Fintech |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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