Correlation Between Bright Led and HannsTouch Solution

Can any of the company-specific risk be diversified away by investing in both Bright Led and HannsTouch Solution 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 Bright Led and HannsTouch Solution into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bright Led Electronics and HannsTouch Solution, you can compare the effects of market volatilities on Bright Led and HannsTouch Solution 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 Bright Led with a short position of HannsTouch Solution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Led and HannsTouch Solution.

Diversification Opportunities for Bright Led and HannsTouch Solution

0.07

Correlation Coefficient

Bright Led  HannsTouch Solution

Significant diversification

The 3 months correlation between Bright and HannsTouch is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bright Led Electronics and HannsTouch Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HannsTouch Solution and Bright Led 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 Bright Led Electronics are associated (or correlated) with HannsTouch Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HannsTouch Solution has no effect on the direction of Bright Led i.e., Bright Led and HannsTouch Solution go up and down completely randomly.

Pair Corralation between Bright Led and HannsTouch Solution

Assuming the 90 days trading horizon Bright Led Electronics is expected to generate 1.35 times more return on investment than HannsTouch Solution. However, Bright Led is 1.35 times more volatile than HannsTouch Solution. It trades about 0.04 of its potential returns per unit of risk. HannsTouch Solution is currently generating about -0.2 per unit of risk. If you would invest  2,190  in Bright Led Electronics on October 10, 2024 and sell it today you would earn a total of  125.00  from holding Bright Led Electronics or generate 5.71% return on investment over 90 days.

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

Bright Led Electronics  vs.  HannsTouch Solution

Bright Led Electronics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Led Electronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bright Led may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HannsTouch Solution

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HannsTouch Solution has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Bright Led and HannsTouch Solution

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

The idea behind Bright Led Electronics and HannsTouch Solution 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.