Correlation Between Camellia Metal and HIM International

Can any of the company-specific risk be diversified away by investing in both Camellia Metal and HIM International 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 HIM International 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 HIM International Music, you can compare the effects of market volatilities on Camellia Metal and HIM International 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 HIM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Camellia Metal and HIM International.

Diversification Opportunities for Camellia Metal and HIM International

-0.27

Correlation Coefficient

Camellia Metal  HIM International

Very good diversification

The 3 months correlation between Camellia and HIM is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Camellia Metal Co and HIM International Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIM International Music 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 HIM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIM International Music has no effect on the direction of Camellia Metal i.e., Camellia Metal and HIM International go up and down completely randomly.

Pair Corralation between Camellia Metal and HIM International

Assuming the 90 days trading horizon Camellia Metal Co is expected to under-perform the HIM International. In addition to that, Camellia Metal is 1.15 times more volatile than HIM International Music. It trades about -0.03 of its total potential returns per unit of risk. HIM International Music is currently generating about 0.05 per unit of volatility. If you would invest  11,700  in HIM International Music on September 17, 2024 and sell it today you would earn a total of  500.00  from holding HIM International Music or generate 4.27% return on investment over 90 days.

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

Camellia Metal Co  vs.  HIM International Music

Camellia Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camellia Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

HIM International Music

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HIM International Music are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, HIM International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Camellia Metal and HIM International

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

The idea behind Camellia Metal Co and HIM International Music 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.