Correlation Between Danen Technology and Hi Lai

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

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

Diversification Opportunities for Danen Technology and Hi Lai

-0.37

Correlation Coefficient

Danen Technology  Hi Lai

Very good diversification

The 3 months correlation between Danen and 1268 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Danen Technology Corp and Hi Lai Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Lai Foods and Danen 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 Danen Technology Corp are associated (or correlated) with Hi Lai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Lai Foods has no effect on the direction of Danen Technology i.e., Danen Technology and Hi Lai go up and down completely randomly.

Pair Corralation between Danen Technology and Hi Lai

Assuming the 90 days trading horizon Danen Technology Corp is expected to under-perform the Hi Lai. In addition to that, Danen Technology is 2.62 times more volatile than Hi Lai Foods Co. It trades about -0.1 of its total potential returns per unit of risk. Hi Lai Foods Co is currently generating about 0.02 per unit of volatility. If you would invest  15,000  in Hi Lai Foods Co on December 22, 2024 and sell it today you would earn a total of  100.00  from holding Hi Lai Foods Co or generate 0.67% return on investment over 90 days.

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

Danen Technology Corp  vs.  Hi Lai Foods Co

Danen Technology Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Danen Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Hi Lai Foods

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hi Lai Foods Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hi Lai 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 Danen Technology and Hi Lai

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

The idea behind Danen Technology Corp and Hi Lai Foods 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.