Correlation Between Hiwin Technologies and Advantech

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

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

Diversification Opportunities for Hiwin Technologies and Advantech

0.05

Correlation Coefficient

Hiwin Technologies  Advantech

Significant diversification

The 3 months correlation between Hiwin and Advantech is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hiwin Technologies Corp and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech and Hiwin Technologies 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 Hiwin Technologies Corp are associated (or correlated) with Advantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantech has no effect on the direction of Hiwin Technologies i.e., Hiwin Technologies and Advantech go up and down completely randomly.

Pair Corralation between Hiwin Technologies and Advantech

Assuming the 90 days trading horizon Hiwin Technologies Corp is expected to generate 1.58 times more return on investment than Advantech. However, Hiwin Technologies is 1.58 times more volatile than Advantech Co. It trades about 0.11 of its potential returns per unit of risk. Advantech Co is currently generating about 0.12 per unit of risk. If you would invest  20,050  in Hiwin Technologies Corp on September 5, 2024 and sell it today you would earn a total of  3,150  from holding Hiwin Technologies Corp or generate 15.71% return on investment over 90 days.

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

Hiwin Technologies Corp  vs.  Advantech Co

Hiwin Technologies Corp

Risk-Adjusted Performance

8 of 100

OK

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

Advantech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advantech Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hiwin Technologies and Advantech

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

The idea behind Hiwin Technologies Corp and Advantech 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.