Correlation Between HB Technology and Ilji Technology

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

By analyzing existing cross correlation between HB Technology TD and Ilji Technology Co, you can compare the effects of market volatilities on HB Technology and Ilji Technology 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 HB Technology with a short position of Ilji Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of HB Technology and Ilji Technology.

Diversification Opportunities for HB Technology and Ilji Technology

0.76

Correlation Coefficient

HB Technology  Ilji Technology

Poor diversification

The 3 months correlation between 078150 and Ilji is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding HB Technology TD and Ilji Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilji Technology and HB 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 HB Technology TD are associated (or correlated) with Ilji Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilji Technology has no effect on the direction of HB Technology i.e., HB Technology and Ilji Technology go up and down completely randomly.

Pair Corralation between HB Technology and Ilji Technology

Assuming the 90 days trading horizon HB Technology TD is expected to generate 1.65 times more return on investment than Ilji Technology. However, HB Technology is 1.65 times more volatile than Ilji Technology Co. It trades about 0.05 of its potential returns per unit of risk. Ilji Technology Co is currently generating about 0.03 per unit of risk. If you would invest  194,700  in HB Technology TD on December 29, 2024 and sell it today you would earn a total of  16,300  from holding HB Technology TD or generate 8.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

HB Technology TD  vs.  Ilji Technology Co

HB Technology TD

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HB Technology TD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HB Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Ilji Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ilji Technology Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ilji Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HB Technology and Ilji Technology

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

The idea behind HB Technology TD and Ilji Technology Co 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.