Correlation Between Everlight Electronics and Harvatek Corp

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

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

Diversification Opportunities for Everlight Electronics and Harvatek Corp

0.36

Correlation Coefficient

Everlight Electronics  Harvatek Corp

Weak diversification

The 3 months correlation between Everlight and Harvatek is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Everlight Electronics Co and Harvatek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvatek Corp and Everlight Electronics 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 Everlight Electronics Co are associated (or correlated) with Harvatek Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvatek Corp has no effect on the direction of Everlight Electronics i.e., Everlight Electronics and Harvatek Corp go up and down completely randomly.

Pair Corralation between Everlight Electronics and Harvatek Corp

Assuming the 90 days trading horizon Everlight Electronics is expected to generate 2.5 times less return on investment than Harvatek Corp. But when comparing it to its historical volatility, Everlight Electronics Co is 2.2 times less risky than Harvatek Corp. It trades about 0.15 of its potential returns per unit of risk. Harvatek Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,015  in Harvatek Corp on October 20, 2024 and sell it today you would earn a total of  290.00  from holding Harvatek Corp or generate 14.39% return on investment over 90 days.

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

Everlight Electronics Co  vs.  Harvatek Corp

Everlight Electronics

Risk-Adjusted Performance

3 of 100

Insignificant

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

Harvatek Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Everlight Electronics Co and Harvatek 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.