Correlation Between Innovative Technology and Hai An
Can any of the company-specific risk be diversified away by investing in both Innovative Technology and Hai An 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 Innovative Technology and Hai An into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Technology Development and Hai An Transport, you can compare the effects of market volatilities on Innovative Technology and Hai An 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 Innovative Technology with a short position of Hai An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Technology and Hai An.
Diversification Opportunities for Innovative Technology and Hai An
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovative and Hai is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Technology Developm and Hai An Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hai An Transport and Innovative Technology 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 Innovative Technology Development are associated (or correlated) with Hai An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hai An Transport has no effect on the direction of Innovative Technology i.e., Innovative Technology and Hai An go up and down completely randomly.
Pair Corralation between Innovative Technology and Hai An
Assuming the 90 days trading horizon Innovative Technology is expected to generate 3.33 times less return on investment than Hai An. But when comparing it to its historical volatility, Innovative Technology Development is 1.16 times less risky than Hai An. It trades about 0.03 of its potential returns per unit of risk. Hai An Transport is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,078,261 in Hai An Transport on September 4, 2024 and sell it today you would earn a total of 2,751,739 from holding Hai An Transport or generate 132.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Technology Developm vs. Hai An Transport
Performance |
| Timeline |
| Innovative Technology |
| Hai An Transport |
Innovative Technology and Hai An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Technology and Hai An
The main advantage of trading using opposite Innovative Technology and Hai An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Technology position performs unexpectedly, Hai An 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 Hai An will offset losses from the drop in Hai An's long position.| Innovative Technology vs. FIT INVEST JSC | Innovative Technology vs. Damsan JSC | Innovative Technology vs. An Phat Plastic | Innovative Technology vs. Alphanam ME |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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