Correlation Between HannsTouch Solution and Optimax Technology

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

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

Diversification Opportunities for HannsTouch Solution and Optimax Technology

0.03

Correlation Coefficient

HannsTouch Solution  Optimax Technology

Significant diversification

The 3 months correlation between HannsTouch and Optimax is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding HannsTouch Solution and Optimax Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimax Technology Corp and HannsTouch Solution 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 HannsTouch Solution are associated (or correlated) with Optimax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimax Technology Corp has no effect on the direction of HannsTouch Solution i.e., HannsTouch Solution and Optimax Technology go up and down completely randomly.

Pair Corralation between HannsTouch Solution and Optimax Technology

Assuming the 90 days trading horizon HannsTouch Solution is expected to generate 4.6 times less return on investment than Optimax Technology. But when comparing it to its historical volatility, HannsTouch Solution is 1.35 times less risky than Optimax Technology. It trades about 0.02 of its potential returns per unit of risk. Optimax Technology Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,780  in Optimax Technology Corp on September 14, 2024 and sell it today you would earn a total of  1,590  from holding Optimax Technology Corp or generate 89.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

HannsTouch Solution  vs.  Optimax Technology Corp

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 fairly stable basic indicators, HannsTouch Solution is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Optimax Technology Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Optimax Technology Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Optimax Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HannsTouch Solution and Optimax Technology

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

The idea behind HannsTouch Solution and Optimax Technology Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.