Correlation Between Awea Mechantronic and Hota Industrial

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

By analyzing existing cross correlation between Awea Mechantronic Co and Hota Industrial Mfg, you can compare the effects of market volatilities on Awea Mechantronic and Hota Industrial 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 Awea Mechantronic with a short position of Hota Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awea Mechantronic and Hota Industrial.

Diversification Opportunities for Awea Mechantronic and Hota Industrial

-0.51

Correlation Coefficient

Awea Mechantronic  Hota Industrial

Excellent diversification

The 3 months correlation between Awea and Hota is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Awea Mechantronic Co and Hota Industrial Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hota Industrial Mfg and Awea Mechantronic 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 Awea Mechantronic Co are associated (or correlated) with Hota Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hota Industrial Mfg has no effect on the direction of Awea Mechantronic i.e., Awea Mechantronic and Hota Industrial go up and down completely randomly.

Pair Corralation between Awea Mechantronic and Hota Industrial

Assuming the 90 days trading horizon Awea Mechantronic Co is expected to generate 0.36 times more return on investment than Hota Industrial. However, Awea Mechantronic Co is 2.74 times less risky than Hota Industrial. It trades about -0.03 of its potential returns per unit of risk. Hota Industrial Mfg is currently generating about -0.11 per unit of risk. If you would invest  3,030  in Awea Mechantronic Co on October 25, 2024 and sell it today you would lose (25.00) from holding Awea Mechantronic Co or give up 0.83% of portfolio value over 90 days.

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

Awea Mechantronic Co  vs.  Hota Industrial Mfg

Awea Mechantronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Awea Mechantronic Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Hota Industrial Mfg

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hota Industrial Mfg are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hota Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Awea Mechantronic and Hota Industrial

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

The idea behind Awea Mechantronic Co and Hota Industrial Mfg 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.