Correlation Between HannStar Board and Cameo Communications

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

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

Diversification Opportunities for HannStar Board and Cameo Communications

0.06

Correlation Coefficient

HannStar Board  Cameo Communications

Significant diversification

The 3 months correlation between HannStar and Cameo is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding HannStar Board Corp and Cameo Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameo Communications and HannStar Board 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 HannStar Board Corp are associated (or correlated) with Cameo Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameo Communications has no effect on the direction of HannStar Board i.e., HannStar Board and Cameo Communications go up and down completely randomly.

Pair Corralation between HannStar Board and Cameo Communications

Assuming the 90 days trading horizon HannStar Board Corp is expected to generate 0.72 times more return on investment than Cameo Communications. However, HannStar Board Corp is 1.38 times less risky than Cameo Communications. It trades about 0.16 of its potential returns per unit of risk. Cameo Communications is currently generating about -0.1 per unit of risk. If you would invest  5,010  in HannStar Board Corp on December 23, 2024 and sell it today you would earn a total of  680.00  from holding HannStar Board Corp or generate 13.57% return on investment over 90 days.

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

HannStar Board Corp  vs.  Cameo Communications

HannStar Board Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HannStar Board Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, HannStar Board showed solid returns over the last few months and may actually be approaching a breakup point.

Cameo Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cameo Communications 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.

Pair Trading with HannStar Board and Cameo Communications

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

The idea behind HannStar Board Corp and Cameo Communications 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.