Correlation Between HTC Corp and Green World

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

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

Diversification Opportunities for HTC Corp and Green World

-0.46

Correlation Coefficient

HTC Corp  Green World

Very good diversification

The 3 months correlation between HTC and Green is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding HTC Corp and Green World Fintech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green World Fintech and HTC Corp 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 HTC Corp are associated (or correlated) with Green World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green World Fintech has no effect on the direction of HTC Corp i.e., HTC Corp and Green World go up and down completely randomly.

Pair Corralation between HTC Corp and Green World

Assuming the 90 days trading horizon HTC Corp is expected to generate 1.29 times more return on investment than Green World. However, HTC Corp is 1.29 times more volatile than Green World Fintech. It trades about -0.05 of its potential returns per unit of risk. Green World Fintech is currently generating about -0.23 per unit of risk. If you would invest  4,300  in HTC Corp on September 23, 2024 and sell it today you would lose (175.00) from holding HTC Corp or give up 4.07% of portfolio value over 90 days.

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

HTC Corp  vs.  Green World Fintech

HTC Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Green World Fintech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Green World Fintech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Green World showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HTC Corp and Green World

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

The idea behind HTC Corp and Green World Fintech 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 Transaction History module to view history of all your transactions and understand their impact on performance.