Correlation Between FUTURETECH and HHG Capital
Can any of the company-specific risk be diversified away by investing in both FUTURETECH and HHG Capital 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 FUTURETECH and HHG Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FUTURETECH II ACQUISITION and HHG Capital, you can compare the effects of market volatilities on FUTURETECH and HHG Capital 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 FUTURETECH with a short position of HHG Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUTURETECH and HHG Capital.
Diversification Opportunities for FUTURETECH and HHG Capital
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FUTURETECH and HHG is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding FUTURETECH II ACQUISITION and HHG Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HHG Capital and FUTURETECH 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 FUTURETECH II ACQUISITION are associated (or correlated) with HHG Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HHG Capital has no effect on the direction of FUTURETECH i.e., FUTURETECH and HHG Capital go up and down completely randomly.
Pair Corralation between FUTURETECH and HHG Capital
Assuming the 90 days horizon FUTURETECH is expected to generate 1.59 times less return on investment than HHG Capital. But when comparing it to its historical volatility, FUTURETECH II ACQUISITION is 1.29 times less risky than HHG Capital. It trades about 0.13 of its potential returns per unit of risk. HHG Capital is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 5.00 in HHG Capital on September 5, 2024 and sell it today you would lose (4.43) from holding HHG Capital or give up 88.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.29% |
| Values | Daily Returns |
FUTURETECH II ACQUISITION vs. HHG Capital
Performance |
| Timeline |
| FUTURETECH II ACQUISITION |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| HHG Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
FUTURETECH and HHG Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FUTURETECH and HHG Capital
The main advantage of trading using opposite FUTURETECH and HHG Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUTURETECH position performs unexpectedly, HHG Capital 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 HHG Capital will offset losses from the drop in HHG Capital's long position.The idea behind FUTURETECH II ACQUISITION and HHG Capital 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.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 Stocks Directory module to find actively traded stocks across global markets.
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