Correlation Between Hastings Technology and CyberAgent

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

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

Diversification Opportunities for Hastings Technology and CyberAgent

0.73

Correlation Coefficient

Hastings Technology  CyberAgent

Poor diversification

The 3 months correlation between Hastings and CyberAgent is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hastings Technology Metals and CyberAgent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberAgent and Hastings 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 Hastings Technology Metals are associated (or correlated) with CyberAgent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberAgent has no effect on the direction of Hastings Technology i.e., Hastings Technology and CyberAgent go up and down completely randomly.

Pair Corralation between Hastings Technology and CyberAgent

Assuming the 90 days horizon Hastings Technology Metals is expected to generate 3.24 times more return on investment than CyberAgent. However, Hastings Technology is 3.24 times more volatile than CyberAgent. It trades about 0.08 of its potential returns per unit of risk. CyberAgent is currently generating about 0.21 per unit of risk. If you would invest  16.00  in Hastings Technology Metals on September 25, 2024 and sell it today you would earn a total of  1.00  from holding Hastings Technology Metals or generate 6.25% return on investment over 90 days.

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

Hastings Technology Metals  vs.  CyberAgent

Hastings Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hastings Technology Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hastings Technology reported solid returns over the last few months and may actually be approaching a breakup point.

CyberAgent

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CyberAgent are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CyberAgent may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hastings Technology and CyberAgent

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

The idea behind Hastings Technology Metals and CyberAgent 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.