Correlation Between Microelectronics and Hitron Technologies

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

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

Diversification Opportunities for Microelectronics and Hitron Technologies

0.51

Correlation Coefficient

Microelectronics  Hitron Technologies

Very weak diversification

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

Pair Corralation between Microelectronics and Hitron Technologies

Assuming the 90 days trading horizon Microelectronics Technology is expected to generate 0.51 times more return on investment than Hitron Technologies. However, Microelectronics Technology is 1.97 times less risky than Hitron Technologies. It trades about 0.02 of its potential returns per unit of risk. Hitron Technologies is currently generating about -0.05 per unit of risk. If you would invest  3,020  in Microelectronics Technology on September 17, 2024 and sell it today you would earn a total of  10.00  from holding Microelectronics Technology or generate 0.33% return on investment over 90 days.

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

Microelectronics Technology  vs.  Hitron Technologies

Microelectronics Tec

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microelectronics Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Microelectronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hitron Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hitron Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hitron Technologies 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 Microelectronics and Hitron Technologies

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

The idea behind Microelectronics Technology and Hitron Technologies 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.