Correlation Between CG Hi and Display Tech

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Can any of the company-specific risk be diversified away by investing in both CG Hi and Display Tech 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 CG Hi and Display Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CG Hi Tech and Display Tech Co, you can compare the effects of market volatilities on CG Hi and Display Tech 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 CG Hi with a short position of Display Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of CG Hi and Display Tech.

Diversification Opportunities for CG Hi and Display Tech

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between 264660 and Display is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CG Hi Tech and Display Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Display Tech and CG Hi 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 CG Hi Tech are associated (or correlated) with Display Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Display Tech has no effect on the direction of CG Hi i.e., CG Hi and Display Tech go up and down completely randomly.

Pair Corralation between CG Hi and Display Tech

Assuming the 90 days trading horizon CG Hi Tech is expected to generate 0.95 times more return on investment than Display Tech. However, CG Hi Tech is 1.06 times less risky than Display Tech. It trades about 0.03 of its potential returns per unit of risk. Display Tech Co is currently generating about -0.01 per unit of risk. If you would invest  1,005,000  in CG Hi Tech on September 20, 2024 and sell it today you would earn a total of  7,000  from holding CG Hi Tech or generate 0.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

CG Hi Tech  vs.  Display Tech Co

 Performance 
       Timeline  
CG Hi Tech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CG Hi Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Display Tech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Display Tech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CG Hi and Display Tech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CG Hi and Display Tech

The main advantage of trading using opposite CG Hi and Display Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CG Hi position performs unexpectedly, Display Tech 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 Display Tech will offset losses from the drop in Display Tech's long position.
The idea behind CG Hi Tech and Display Tech Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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