Correlation Between Camellia Metal and Highlight Tech

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

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

Diversification Opportunities for Camellia Metal and Highlight Tech

0.05

Correlation Coefficient

Camellia Metal  Highlight Tech

Significant diversification

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

Pair Corralation between Camellia Metal and Highlight Tech

Assuming the 90 days trading horizon Camellia Metal Co is expected to generate 0.64 times more return on investment than Highlight Tech. However, Camellia Metal Co is 1.57 times less risky than Highlight Tech. It trades about 0.04 of its potential returns per unit of risk. Highlight Tech is currently generating about -0.15 per unit of risk. If you would invest  1,465  in Camellia Metal Co on December 25, 2024 and sell it today you would earn a total of  25.00  from holding Camellia Metal Co or generate 1.71% return on investment over 90 days.

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

Camellia Metal Co  vs.  Highlight Tech

Camellia Metal

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Camellia Metal Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Camellia Metal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Highlight Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Highlight Tech 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Camellia Metal and Highlight Tech

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

The idea behind Camellia Metal Co and Highlight Tech 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.