Correlation Between Hainan Expressway and Lootom Telcovideo

Can any of the company-specific risk be diversified away by investing in both Hainan Expressway and Lootom Telcovideo 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 Hainan Expressway and Lootom Telcovideo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hainan Expressway Co and Lootom Telcovideo Network, you can compare the effects of market volatilities on Hainan Expressway and Lootom Telcovideo 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 Hainan Expressway with a short position of Lootom Telcovideo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Expressway and Lootom Telcovideo.

Diversification Opportunities for Hainan Expressway and Lootom Telcovideo

0.4

Correlation Coefficient

Hainan Expressway  Lootom Telcovideo

Very weak diversification

The 3 months correlation between Hainan and Lootom is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Expressway Co and Lootom Telcovideo Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lootom Telcovideo Network and Hainan Expressway 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 Hainan Expressway Co are associated (or correlated) with Lootom Telcovideo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lootom Telcovideo Network has no effect on the direction of Hainan Expressway i.e., Hainan Expressway and Lootom Telcovideo go up and down completely randomly.

Pair Corralation between Hainan Expressway and Lootom Telcovideo

Assuming the 90 days trading horizon Hainan Expressway Co is expected to generate 1.13 times more return on investment than Lootom Telcovideo. However, Hainan Expressway is 1.13 times more volatile than Lootom Telcovideo Network. It trades about 0.09 of its potential returns per unit of risk. Lootom Telcovideo Network is currently generating about 0.01 per unit of risk. If you would invest  521.00  in Hainan Expressway Co on October 26, 2024 and sell it today you would earn a total of  100.00  from holding Hainan Expressway Co or generate 19.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Hainan Expressway Co  vs.  Lootom Telcovideo Network

Hainan Expressway

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hainan Expressway Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hainan Expressway sustained solid returns over the last few months and may actually be approaching a breakup point.

Lootom Telcovideo Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lootom Telcovideo Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lootom Telcovideo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hainan Expressway and Lootom Telcovideo

The main advantage of trading using opposite Hainan Expressway and Lootom Telcovideo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hainan Expressway position performs unexpectedly, Lootom Telcovideo 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 Lootom Telcovideo will offset losses from the drop in Lootom Telcovideo's long position.

The idea behind Hainan Expressway Co and Lootom Telcovideo Network 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.