Correlation Between Excellence Optoelectronic and HIM International
Can any of the company-specific risk be diversified away by investing in both Excellence Optoelectronic and HIM International 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 Excellence Optoelectronic and HIM International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Excellence Optoelectronic and HIM International Music, you can compare the effects of market volatilities on Excellence Optoelectronic and HIM International 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 Excellence Optoelectronic with a short position of HIM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excellence Optoelectronic and HIM International.
Diversification Opportunities for Excellence Optoelectronic and HIM International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Excellence and HIM is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Excellence Optoelectronic and HIM International Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIM International Music and Excellence Optoelectronic 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 Excellence Optoelectronic are associated (or correlated) with HIM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIM International Music has no effect on the direction of Excellence Optoelectronic i.e., Excellence Optoelectronic and HIM International go up and down completely randomly.
Pair Corralation between Excellence Optoelectronic and HIM International
Assuming the 90 days trading horizon Excellence Optoelectronic is expected to generate 1.43 times less return on investment than HIM International. In addition to that, Excellence Optoelectronic is 1.74 times more volatile than HIM International Music. It trades about 0.03 of its total potential returns per unit of risk. HIM International Music is currently generating about 0.07 per unit of volatility. If you would invest 10,200 in HIM International Music on August 26, 2024 and sell it today you would earn a total of 2,350 from holding HIM International Music or generate 23.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Excellence Optoelectronic vs. HIM International Music
Performance |
| Timeline |
| Excellence Optoelectronic |
| HIM International Music |
Excellence Optoelectronic and HIM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Excellence Optoelectronic and HIM International
The main advantage of trading using opposite Excellence Optoelectronic and HIM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excellence Optoelectronic position performs unexpectedly, HIM International 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 HIM International will offset losses from the drop in HIM International's long position.| Excellence Optoelectronic vs. Advantech Co | Excellence Optoelectronic vs. IEI Integration Corp | Excellence Optoelectronic vs. Flytech Technology Co | Excellence Optoelectronic vs. ADLINK Technology |
| HIM International vs. Syntek Semiconductor Co | HIM International vs. Leader Electronics | HIM International vs. Excellence Optoelectronic | HIM International vs. Microelectronics Technology |
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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