Correlation Between Hai An and Innovative Technology
Can any of the company-specific risk be diversified away by investing in both Hai An and Innovative Technology 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 Hai An and Innovative Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hai An Transport and Innovative Technology Development, you can compare the effects of market volatilities on Hai An and Innovative Technology 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 Hai An with a short position of Innovative Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hai An and Innovative Technology.
Diversification Opportunities for Hai An and Innovative Technology
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hai and Innovative is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hai An Transport and Innovative Technology Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Technology and Hai An 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 Hai An Transport are associated (or correlated) with Innovative Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Technology has no effect on the direction of Hai An i.e., Hai An and Innovative Technology go up and down completely randomly.
Pair Corralation between Hai An and Innovative Technology
Assuming the 90 days trading horizon Hai An Transport is expected to generate 0.6 times more return on investment than Innovative Technology. However, Hai An Transport is 1.67 times less risky than Innovative Technology. It trades about 0.23 of its potential returns per unit of risk. Innovative Technology Development is currently generating about -0.02 per unit of risk. If you would invest 4,870,000 in Hai An Transport on November 7, 2024 and sell it today you would earn a total of 310,000 from holding Hai An Transport or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hai An Transport vs. Innovative Technology Developm
Performance |
| Timeline |
| Hai An Transport |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Innovative Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Hai An and Innovative Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hai An and Innovative Technology
The main advantage of trading using opposite Hai An and Innovative Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hai An position performs unexpectedly, Innovative Technology 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 Innovative Technology will offset losses from the drop in Innovative Technology's long position.The idea behind Hai An Transport and Innovative Technology Development 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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