Correlation Between YLZ Information and HMTNew Technical

Can any of the company-specific risk be diversified away by investing in both YLZ Information and HMTNew Technical 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 YLZ Information and HMTNew Technical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YLZ Information Tech and HMTNew Technical, you can compare the effects of market volatilities on YLZ Information and HMTNew Technical 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 YLZ Information with a short position of HMTNew Technical. Check out your portfolio center. Please also check ongoing floating volatility patterns of YLZ Information and HMTNew Technical.

Diversification Opportunities for YLZ Information and HMTNew Technical

-0.11

Correlation Coefficient

YLZ Information  HMTNew Technical

Good diversification

The 3 months correlation between YLZ and HMTNew is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding YLZ Information Tech and HMTNew Technical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMTNew Technical and YLZ Information 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 YLZ Information Tech are associated (or correlated) with HMTNew Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMTNew Technical has no effect on the direction of YLZ Information i.e., YLZ Information and HMTNew Technical go up and down completely randomly.

Pair Corralation between YLZ Information and HMTNew Technical

Assuming the 90 days trading horizon YLZ Information Tech is expected to under-perform the HMTNew Technical. In addition to that, YLZ Information is 1.15 times more volatile than HMTNew Technical. It trades about -0.01 of its total potential returns per unit of risk. HMTNew Technical is currently generating about 0.01 per unit of volatility. If you would invest  3,989  in HMTNew Technical on December 4, 2024 and sell it today you would lose (159.00) from holding HMTNew Technical or give up 3.99% of portfolio value over 90 days.

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

YLZ Information Tech  vs.  HMTNew Technical

YLZ Information Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days YLZ Information Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, YLZ Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HMTNew Technical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HMTNew Technical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HMTNew Technical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YLZ Information and HMTNew Technical

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

The idea behind YLZ Information Tech and HMTNew Technical 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..