Correlation Between Elite Material and HannStar Board

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

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

Diversification Opportunities for Elite Material and HannStar Board

0.45

Correlation Coefficient

Elite Material  HannStar Board

Very weak diversification

The 3 months correlation between Elite and HannStar is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Elite Material Co and HannStar Board Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HannStar Board Corp and Elite Material 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 Elite Material Co are associated (or correlated) with HannStar Board. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HannStar Board Corp has no effect on the direction of Elite Material i.e., Elite Material and HannStar Board go up and down completely randomly.

Pair Corralation between Elite Material and HannStar Board

Assuming the 90 days trading horizon Elite Material Co is expected to under-perform the HannStar Board. In addition to that, Elite Material is 2.04 times more volatile than HannStar Board Corp. It trades about -0.02 of its total potential returns per unit of risk. HannStar Board Corp is currently generating about 0.04 per unit of volatility. If you would invest  5,400  in HannStar Board Corp on December 30, 2024 and sell it today you would earn a total of  130.00  from holding HannStar Board Corp or generate 2.41% return on investment over 90 days.

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

Elite Material Co  vs.  HannStar Board Corp

Elite Material

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elite Material Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Elite Material is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

HannStar Board Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HannStar Board Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, HannStar Board 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 Elite Material and HannStar Board

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

The idea behind Elite Material Co and HannStar Board Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.