Correlation Between Hillcrest Energy and Deswell Industries
Can any of the company-specific risk be diversified away by investing in both Hillcrest Energy and Deswell Industries 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 Hillcrest Energy and Deswell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hillcrest Energy Technologies and Deswell Industries, you can compare the effects of market volatilities on Hillcrest Energy and Deswell Industries 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 Hillcrest Energy with a short position of Deswell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hillcrest Energy and Deswell Industries.
Diversification Opportunities for Hillcrest Energy and Deswell Industries
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hillcrest and Deswell is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hillcrest Energy Technologies and Deswell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deswell Industries and Hillcrest Energy 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 Hillcrest Energy Technologies are associated (or correlated) with Deswell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deswell Industries has no effect on the direction of Hillcrest Energy i.e., Hillcrest Energy and Deswell Industries go up and down completely randomly.
Pair Corralation between Hillcrest Energy and Deswell Industries
Assuming the 90 days horizon Hillcrest Energy Technologies is expected to generate 5.52 times more return on investment than Deswell Industries. However, Hillcrest Energy is 5.52 times more volatile than Deswell Industries. It trades about 0.05 of its potential returns per unit of risk. Deswell Industries is currently generating about -0.01 per unit of risk. If you would invest 8.68 in Hillcrest Energy Technologies on November 3, 2024 and sell it today you would earn a total of 0.19 from holding Hillcrest Energy Technologies or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hillcrest Energy Technologies vs. Deswell Industries
Performance |
| Timeline |
| Hillcrest Energy Tec |
| Deswell Industries |
Hillcrest Energy and Deswell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hillcrest Energy and Deswell Industries
The main advantage of trading using opposite Hillcrest Energy and Deswell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hillcrest Energy position performs unexpectedly, Deswell Industries 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 Deswell Industries will offset losses from the drop in Deswell Industries' long position.| Hillcrest Energy vs. Deswell Industries | Hillcrest Energy vs. Ostin Technology Group | Hillcrest Energy vs. Interlink Electronics | Hillcrest Energy vs. SigmaTron International |
| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. SigmaTron International | Deswell Industries vs. Daktronics |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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