Correlation Between ADX and HiProMine
Can any of the company-specific risk be diversified away by investing in both ADX and HiProMine 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 ADX and HiProMine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADX and HiProMine SA, you can compare the effects of market volatilities on ADX and HiProMine 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 ADX with a short position of HiProMine. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADX and HiProMine.
Diversification Opportunities for ADX and HiProMine
Modest diversification
The 3 months correlation between ADX and HiProMine is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ADX and HiProMine SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HiProMine SA and ADX 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 ADX are associated (or correlated) with HiProMine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HiProMine SA has no effect on the direction of ADX i.e., ADX and HiProMine go up and down completely randomly.
Pair Corralation between ADX and HiProMine
Assuming the 90 days trading horizon ADX is expected to under-perform the HiProMine. In addition to that, ADX is 1.91 times more volatile than HiProMine SA. It trades about -0.06 of its total potential returns per unit of risk. HiProMine SA is currently generating about -0.03 per unit of volatility. If you would invest 22,500 in HiProMine SA on September 2, 2024 and sell it today you would lose (2,700) from holding HiProMine SA or give up 12.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.56% |
| Values | Daily Returns |
ADX vs. HiProMine SA
Performance |
| Timeline |
| ADX |
| HiProMine SA |
ADX and HiProMine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADX and HiProMine
The main advantage of trading using opposite ADX and HiProMine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADX position performs unexpectedly, HiProMine 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 HiProMine will offset losses from the drop in HiProMine's long position.The idea behind ADX and HiProMine SA 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.| HiProMine vs. Centrum Finansowe Banku | HiProMine vs. PMPG Polskie Media | HiProMine vs. SOFTWARE MANSION SPOLKA | HiProMine vs. Bank Millennium SA |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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