Correlation Between Adata Technology and Hi Sharp

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

By analyzing existing cross correlation between Adata Technology Co and Hi Sharp Electronics, you can compare the effects of market volatilities on Adata Technology and Hi Sharp 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 Adata Technology with a short position of Hi Sharp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adata Technology and Hi Sharp.

Diversification Opportunities for Adata Technology and Hi Sharp

0.82

Correlation Coefficient

Adata Technology  Hi Sharp

Very poor diversification

The 3 months correlation between Adata and 3128 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Adata Technology Co and Hi Sharp Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Sharp Electronics and Adata Technology 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 Adata Technology Co are associated (or correlated) with Hi Sharp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Sharp Electronics has no effect on the direction of Adata Technology i.e., Adata Technology and Hi Sharp go up and down completely randomly.

Pair Corralation between Adata Technology and Hi Sharp

Assuming the 90 days trading horizon Adata Technology is expected to generate 1.0 times less return on investment than Hi Sharp. But when comparing it to its historical volatility, Adata Technology Co is 1.32 times less risky than Hi Sharp. It trades about 0.15 of its potential returns per unit of risk. Hi Sharp Electronics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,750  in Hi Sharp Electronics on December 23, 2024 and sell it today you would earn a total of  490.00  from holding Hi Sharp Electronics or generate 17.82% return on investment over 90 days.

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

Adata Technology Co  vs.  Hi Sharp Electronics

Adata Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adata Technology Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Adata Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Hi Sharp Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hi Sharp Electronics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hi Sharp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adata Technology and Hi Sharp

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

The idea behind Adata Technology Co and Hi Sharp Electronics 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.