Correlation Between IAC and Hello
Can any of the company-specific risk be diversified away by investing in both IAC and Hello 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 IAC and Hello into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAC Inc and Hello Group, you can compare the effects of market volatilities on IAC and Hello 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 IAC with a short position of Hello. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAC and Hello.
Diversification Opportunities for IAC and Hello
Average diversification
The 3 months correlation between IAC and Hello is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding IAC Inc and Hello Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hello Group and IAC 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 IAC Inc are associated (or correlated) with Hello. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hello Group has no effect on the direction of IAC i.e., IAC and Hello go up and down completely randomly.
Pair Corralation between IAC and Hello
Considering the 90-day investment horizon IAC Inc is expected to under-perform the Hello. But the stock apears to be less risky and, when comparing its historical volatility, IAC Inc is 1.27 times less risky than Hello. The stock trades about -0.02 of its potential returns per unit of risk. The Hello Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 906.00 in Hello Group on August 28, 2024 and sell it today you would lose (259.00) from holding Hello Group or give up 28.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAC Inc vs. Hello Group
Performance |
| Timeline |
| IAC Inc |
| Hello Group |
IAC and Hello Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAC and Hello
The main advantage of trading using opposite IAC and Hello positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAC position performs unexpectedly, Hello 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 Hello will offset losses from the drop in Hello's long position.The idea behind IAC Inc and Hello Group 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.| Hello vs. Weibo Corp | Hello vs. Autohome | Hello vs. Tencent Music Entertainment | Hello vs. DouYu International Holdings |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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