Correlation Between Hi Tech and Ventive Hospitality

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Hi Tech and Ventive Hospitality 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 Hi Tech and Ventive Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hi Tech Gears and Ventive Hospitality, you can compare the effects of market volatilities on Hi Tech and Ventive Hospitality 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 Hi Tech with a short position of Ventive Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Tech and Ventive Hospitality.

Diversification Opportunities for Hi Tech and Ventive Hospitality

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between HITECHGEAR and Ventive is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding The Hi Tech Gears and Ventive Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ventive Hospitality and Hi Tech 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 The Hi Tech Gears are associated (or correlated) with Ventive Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventive Hospitality has no effect on the direction of Hi Tech i.e., Hi Tech and Ventive Hospitality go up and down completely randomly.

Pair Corralation between Hi Tech and Ventive Hospitality

Assuming the 90 days trading horizon The Hi Tech Gears is expected to generate 1.15 times more return on investment than Ventive Hospitality. However, Hi Tech is 1.15 times more volatile than Ventive Hospitality. It trades about -0.12 of its potential returns per unit of risk. Ventive Hospitality is currently generating about -0.14 per unit of risk. If you would invest  80,875  in The Hi Tech Gears on October 27, 2024 and sell it today you would lose (4,355) from holding The Hi Tech Gears or give up 5.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy90.48%
ValuesDaily Returns

The Hi Tech Gears  vs.  Ventive Hospitality

 Performance 
       Timeline  
Hi Tech 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in The Hi Tech Gears are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Hi Tech is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Ventive Hospitality 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ventive Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hi Tech and Ventive Hospitality Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hi Tech and Ventive Hospitality

The main advantage of trading using opposite Hi Tech and Ventive Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Tech position performs unexpectedly, Ventive Hospitality 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 Ventive Hospitality will offset losses from the drop in Ventive Hospitality's long position.
The idea behind The Hi Tech Gears and Ventive Hospitality 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios