Correlation Between HOYA Resort and Plastron Precision

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

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

Diversification Opportunities for HOYA Resort and Plastron Precision

-0.09

Correlation Coefficient

HOYA Resort  Plastron Precision

Good diversification

The 3 months correlation between HOYA and Plastron is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding HOYA Resort Hotel and Plastron Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastron Precision and HOYA Resort 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 HOYA Resort Hotel are associated (or correlated) with Plastron Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastron Precision has no effect on the direction of HOYA Resort i.e., HOYA Resort and Plastron Precision go up and down completely randomly.

Pair Corralation between HOYA Resort and Plastron Precision

Assuming the 90 days trading horizon HOYA Resort is expected to generate 1.06 times less return on investment than Plastron Precision. In addition to that, HOYA Resort is 1.57 times more volatile than Plastron Precision Co. It trades about 0.02 of its total potential returns per unit of risk. Plastron Precision Co is currently generating about 0.03 per unit of volatility. If you would invest  1,254  in Plastron Precision Co on October 27, 2024 and sell it today you would earn a total of  211.00  from holding Plastron Precision Co or generate 16.83% return on investment over 90 days.

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

HOYA Resort Hotel  vs.  Plastron Precision Co

HOYA Resort Hotel

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HOYA Resort Hotel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, HOYA Resort showed solid returns over the last few months and may actually be approaching a breakup point.

Plastron Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plastron Precision Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with HOYA Resort and Plastron Precision

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

The idea behind HOYA Resort Hotel and Plastron Precision 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.