Correlation Between Highlight Tech and Fittech
Can any of the company-specific risk be diversified away by investing in both Highlight Tech and Fittech 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 Fittech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highlight Tech and Fittech Co, you can compare the effects of market volatilities on Highlight Tech and Fittech 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 Fittech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Tech and Fittech.
Diversification Opportunities for Highlight Tech and Fittech
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highlight and Fittech is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Tech and Fittech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fittech 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 Fittech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fittech has no effect on the direction of Highlight Tech i.e., Highlight Tech and Fittech go up and down completely randomly.
Pair Corralation between Highlight Tech and Fittech
Assuming the 90 days trading horizon Highlight Tech is expected to generate 3.16 times less return on investment than Fittech. But when comparing it to its historical volatility, Highlight Tech is 1.39 times less risky than Fittech. It trades about 0.02 of its potential returns per unit of risk. Fittech Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,927 in Fittech Co on September 3, 2024 and sell it today you would earn a total of 5,923 from holding Fittech Co or generate 66.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Tech vs. Fittech Co
Performance |
| Timeline |
| Highlight Tech |
| Fittech |
Highlight Tech and Fittech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Tech and Fittech
The main advantage of trading using opposite Highlight Tech and Fittech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Tech position performs unexpectedly, Fittech 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 Fittech will offset losses from the drop in Fittech'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 |
| Fittech vs. Highlight Tech | Fittech vs. WiseChip Semiconductor | Fittech vs. Novatek Microelectronics Corp | Fittech vs. Leader 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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