Correlation Between INKON Life and Haima Automobile

Can any of the company-specific risk be diversified away by investing in both INKON Life and Haima Automobile 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 INKON Life and Haima Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INKON Life Technology and Haima Automobile Group, you can compare the effects of market volatilities on INKON Life and Haima Automobile 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 INKON Life with a short position of Haima Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of INKON Life and Haima Automobile.

Diversification Opportunities for INKON Life and Haima Automobile

0.74

Correlation Coefficient

INKON Life  Haima Automobile

Poor diversification

The 3 months correlation between INKON and Haima is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding INKON Life Technology and Haima Automobile Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haima Automobile and INKON Life 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 INKON Life Technology are associated (or correlated) with Haima Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haima Automobile has no effect on the direction of INKON Life i.e., INKON Life and Haima Automobile go up and down completely randomly.

Pair Corralation between INKON Life and Haima Automobile

Assuming the 90 days trading horizon INKON Life Technology is expected to under-perform the Haima Automobile. But the stock apears to be less risky and, when comparing its historical volatility, INKON Life Technology is 1.77 times less risky than Haima Automobile. The stock trades about -0.11 of its potential returns per unit of risk. The Haima Automobile Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  452.00  in Haima Automobile Group on September 26, 2024 and sell it today you would lose (8.00) from holding Haima Automobile Group or give up 1.77% of portfolio value over 90 days.

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

INKON Life Technology  vs.  Haima Automobile Group

INKON Life Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INKON Life Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, INKON Life sustained solid returns over the last few months and may actually be approaching a breakup point.

Haima Automobile

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Haima Automobile Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Haima Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INKON Life and Haima Automobile

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

The idea behind INKON Life Technology and Haima Automobile Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.