Correlation Between Actron Technology and Hu Lane
Can any of the company-specific risk be diversified away by investing in both Actron Technology and Hu Lane 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 Actron Technology and Hu Lane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Actron Technology and Hu Lane Associate, you can compare the effects of market volatilities on Actron Technology and Hu Lane 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 Actron Technology with a short position of Hu Lane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Actron Technology and Hu Lane.
Diversification Opportunities for Actron Technology and Hu Lane
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Actron and 6279 is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Actron Technology and Hu Lane Associate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hu Lane Associate and Actron Technology 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 Actron Technology are associated (or correlated) with Hu Lane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hu Lane Associate has no effect on the direction of Actron Technology i.e., Actron Technology and Hu Lane go up and down completely randomly.
Pair Corralation between Actron Technology and Hu Lane
Assuming the 90 days trading horizon Actron Technology is expected to under-perform the Hu Lane. But the stock apears to be less risky and, when comparing its historical volatility, Actron Technology is 1.42 times less risky than Hu Lane. The stock trades about -0.13 of its potential returns per unit of risk. The Hu Lane Associate is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 17,900 in Hu Lane Associate on September 3, 2024 and sell it today you would lose (1,350) from holding Hu Lane Associate or give up 7.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Actron Technology vs. Hu Lane Associate
Performance |
| Timeline |
| Actron Technology |
| Hu Lane Associate |
Actron Technology and Hu Lane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Actron Technology and Hu Lane
The main advantage of trading using opposite Actron Technology and Hu Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Actron Technology position performs unexpectedly, Hu Lane 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 Hu Lane will offset losses from the drop in Hu Lane's long position.| Actron Technology vs. Te Chang Construction | Actron Technology vs. Chinese Maritime Transport | Actron Technology vs. Lihtai Construction Enterprise | Actron Technology vs. Insyde Software |
| Hu Lane vs. Tainan Spinning Co | Hu Lane vs. Chia Her Industrial | Hu Lane vs. WiseChip Semiconductor | Hu Lane vs. Novatek Microelectronics Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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