Correlation Between Haitai Confectionery and SV Investment

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

By analyzing existing cross correlation between Haitai Confectionery Foods and SV Investment, you can compare the effects of market volatilities on Haitai Confectionery and SV Investment 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 Haitai Confectionery with a short position of SV Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haitai Confectionery and SV Investment.

Diversification Opportunities for Haitai Confectionery and SV Investment

-0.2

Correlation Coefficient

Haitai Confectionery  SV Investment

Good diversification

The 3 months correlation between Haitai and 289080 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Haitai Confectionery Foods and SV Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SV Investment and Haitai Confectionery 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 Haitai Confectionery Foods are associated (or correlated) with SV Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SV Investment has no effect on the direction of Haitai Confectionery i.e., Haitai Confectionery and SV Investment go up and down completely randomly.

Pair Corralation between Haitai Confectionery and SV Investment

Assuming the 90 days trading horizon Haitai Confectionery Foods is expected to under-perform the SV Investment. But the stock apears to be less risky and, when comparing its historical volatility, Haitai Confectionery Foods is 1.16 times less risky than SV Investment. The stock trades about -0.24 of its potential returns per unit of risk. The SV Investment is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  132,700  in SV Investment on October 25, 2024 and sell it today you would lose (3,600) from holding SV Investment or give up 2.71% of portfolio value over 90 days.

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

Haitai Confectionery Foods  vs.  SV Investment

Haitai Confectionery

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haitai Confectionery Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Haitai Confectionery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SV Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SV Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Haitai Confectionery and SV Investment

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

The idea behind Haitai Confectionery Foods and SV Investment 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.