Correlation Between Hota Industrial and Da Cin

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

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

Diversification Opportunities for Hota Industrial and Da Cin

0.7

Correlation Coefficient

Hota Industrial  Da Cin

Poor diversification

The 3 months correlation between Hota and 2535 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hota Industrial Mfg and Da Cin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Da Cin Construction and Hota Industrial 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 Hota Industrial Mfg are associated (or correlated) with Da Cin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Da Cin Construction has no effect on the direction of Hota Industrial i.e., Hota Industrial and Da Cin go up and down completely randomly.

Pair Corralation between Hota Industrial and Da Cin

Assuming the 90 days trading horizon Hota Industrial Mfg is expected to generate 4.14 times more return on investment than Da Cin. However, Hota Industrial is 4.14 times more volatile than Da Cin Construction Co. It trades about 0.13 of its potential returns per unit of risk. Da Cin Construction Co is currently generating about -0.05 per unit of risk. If you would invest  6,110  in Hota Industrial Mfg on October 10, 2024 and sell it today you would earn a total of  440.00  from holding Hota Industrial Mfg or generate 7.2% return on investment over 90 days.

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

Hota Industrial Mfg  vs.  Da Cin Construction Co

Hota Industrial Mfg

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hota Industrial Mfg are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hota Industrial showed solid returns over the last few months and may actually be approaching a breakup point.

Da Cin Construction

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Da Cin Construction Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Da Cin may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hota Industrial and Da Cin

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

The idea behind Hota Industrial Mfg and Da Cin Construction 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.