Correlation Between HannStar Board and Rafael Microelectronics

Can any of the company-specific risk be diversified away by investing in both HannStar Board and Rafael Microelectronics 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 Rafael Microelectronics 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 Rafael Microelectronics, you can compare the effects of market volatilities on HannStar Board and Rafael Microelectronics 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 Rafael Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of HannStar Board and Rafael Microelectronics.

Diversification Opportunities for HannStar Board and Rafael Microelectronics

0.58

Correlation Coefficient

HannStar Board  Rafael Microelectronics

Very weak diversification

The 3 months correlation between HannStar and Rafael is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding HannStar Board Corp and Rafael Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafael Microelectronics 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 Rafael Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafael Microelectronics has no effect on the direction of HannStar Board i.e., HannStar Board and Rafael Microelectronics go up and down completely randomly.

Pair Corralation between HannStar Board and Rafael Microelectronics

Assuming the 90 days trading horizon HannStar Board Corp is expected to generate 0.45 times more return on investment than Rafael Microelectronics. However, HannStar Board Corp is 2.22 times less risky than Rafael Microelectronics. It trades about 0.15 of its potential returns per unit of risk. Rafael Microelectronics is currently generating about 0.05 per unit of risk. If you would invest  5,020  in HannStar Board Corp on December 24, 2024 and sell it today you would earn a total of  630.00  from holding HannStar Board Corp or generate 12.55% return on investment over 90 days.

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

HannStar Board Corp  vs.  Rafael Microelectronics

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 11 (%) 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.

Rafael Microelectronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rafael Microelectronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Rafael Microelectronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HannStar Board and Rafael Microelectronics

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

The idea behind HannStar Board Corp and Rafael Microelectronics 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.