Correlation Between Highwealth Construction and HOYA Resort

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

By analyzing existing cross correlation between Highwealth Construction Corp and HOYA Resort Hotel, you can compare the effects of market volatilities on Highwealth Construction and HOYA Resort 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 Highwealth Construction with a short position of HOYA Resort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highwealth Construction and HOYA Resort.

Diversification Opportunities for Highwealth Construction and HOYA Resort

0.3

Correlation Coefficient

Highwealth Construction  HOYA Resort

Weak diversification

The 3 months correlation between Highwealth and HOYA is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Highwealth Construction Corp and HOYA Resort Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA Resort Hotel and Highwealth Construction 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 Highwealth Construction Corp are associated (or correlated) with HOYA Resort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA Resort Hotel has no effect on the direction of Highwealth Construction i.e., Highwealth Construction and HOYA Resort go up and down completely randomly.

Pair Corralation between Highwealth Construction and HOYA Resort

Assuming the 90 days trading horizon Highwealth Construction Corp is expected to generate 0.43 times more return on investment than HOYA Resort. However, Highwealth Construction Corp is 2.33 times less risky than HOYA Resort. It trades about 0.11 of its potential returns per unit of risk. HOYA Resort Hotel is currently generating about -0.01 per unit of risk. If you would invest  4,225  in Highwealth Construction Corp on December 25, 2024 and sell it today you would earn a total of  305.00  from holding Highwealth Construction Corp or generate 7.22% return on investment over 90 days.

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

Highwealth Construction Corp  vs.  HOYA Resort Hotel

Highwealth Construction

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Highwealth Construction Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Highwealth Construction may actually be approaching a critical reversion point that can send shares even higher in April 2025.

HOYA Resort Hotel

Risk-Adjusted Performance

Very Weak

Over the last 90 days HOYA Resort Hotel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, HOYA Resort 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 Highwealth Construction and HOYA Resort

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

The idea behind Highwealth Construction Corp and HOYA Resort Hotel 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.