Correlation Between Vivotek and Hunt Electronic

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

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

Diversification Opportunities for Vivotek and Hunt Electronic

0.32

Correlation Coefficient

Vivotek  Hunt Electronic

Weak diversification

The 3 months correlation between Vivotek and Hunt is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vivotek and Hunt Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunt Electronic and Vivotek 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 Vivotek are associated (or correlated) with Hunt Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunt Electronic has no effect on the direction of Vivotek i.e., Vivotek and Hunt Electronic go up and down completely randomly.

Pair Corralation between Vivotek and Hunt Electronic

Assuming the 90 days trading horizon Vivotek is expected to generate 1.57 times less return on investment than Hunt Electronic. In addition to that, Vivotek is 2.01 times more volatile than Hunt Electronic Co. It trades about 0.06 of its total potential returns per unit of risk. Hunt Electronic Co is currently generating about 0.2 per unit of volatility. If you would invest  2,120  in Hunt Electronic Co on December 2, 2024 and sell it today you would earn a total of  105.00  from holding Hunt Electronic Co or generate 4.95% return on investment over 90 days.

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

Vivotek  vs.  Hunt Electronic Co

Vivotek

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vivotek are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Vivotek showed solid returns over the last few months and may actually be approaching a breakup point.

Hunt Electronic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hunt Electronic Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hunt Electronic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Vivotek and Hunt Electronic

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

The idea behind Vivotek and Hunt Electronic Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.