Correlation Between Hi Tech and Beco Steel
Can any of the company-specific risk be diversified away by investing in both Hi Tech and Beco Steel 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 Beco Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hi Tech Lubricants and Beco Steel, you can compare the effects of market volatilities on Hi Tech and Beco Steel 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 Beco Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Tech and Beco Steel.
Diversification Opportunities for Hi Tech and Beco Steel
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between HTL and Beco is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hi Tech Lubricants and Beco Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beco Steel 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 Hi Tech Lubricants are associated (or correlated) with Beco Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beco Steel has no effect on the direction of Hi Tech i.e., Hi Tech and Beco Steel go up and down completely randomly.
Pair Corralation between Hi Tech and Beco Steel
Assuming the 90 days trading horizon Hi Tech Lubricants is expected to generate 1.08 times more return on investment than Beco Steel. However, Hi Tech is 1.08 times more volatile than Beco Steel. It trades about 0.13 of its potential returns per unit of risk. Beco Steel is currently generating about 0.06 per unit of risk. If you would invest 3,910 in Hi Tech Lubricants on August 27, 2024 and sell it today you would earn a total of 323.00 from holding Hi Tech Lubricants or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hi Tech Lubricants vs. Beco Steel
Performance |
| Timeline |
| Hi Tech Lubricants |
| Beco Steel |
Hi Tech and Beco Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hi Tech and Beco Steel
The main advantage of trading using opposite Hi Tech and Beco Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Tech position performs unexpectedly, Beco Steel 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 Beco Steel will offset losses from the drop in Beco Steel's long position.| Hi Tech vs. Al Ghazi Tractors | Hi Tech vs. Shell Pakistan | Hi Tech vs. Nestle Pakistan | Hi Tech vs. Hinopak Motors |
| Beco Steel vs. Habib Insurance | Beco Steel vs. Century Insurance | Beco Steel vs. Reliance Weaving Mills | Beco Steel vs. Media Times |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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