Correlation Between Hastings Technology and NEW WORLD
Can any of the company-specific risk be diversified away by investing in both Hastings Technology and NEW WORLD 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 NEW WORLD 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 NEW WORLD DEVCO, you can compare the effects of market volatilities on Hastings Technology and NEW WORLD 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 NEW WORLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hastings Technology and NEW WORLD.
Diversification Opportunities for Hastings Technology and NEW WORLD
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hastings and NEW is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hastings Technology Metals and NEW WORLD DEVCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW WORLD DEVCO 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 NEW WORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW WORLD DEVCO has no effect on the direction of Hastings Technology i.e., Hastings Technology and NEW WORLD go up and down completely randomly.
Pair Corralation between Hastings Technology and NEW WORLD
Assuming the 90 days horizon Hastings Technology Metals is expected to generate 1.5 times more return on investment than NEW WORLD. However, Hastings Technology is 1.5 times more volatile than NEW WORLD DEVCO. It trades about 0.21 of its potential returns per unit of risk. NEW WORLD DEVCO is currently generating about -0.3 per unit of risk. If you would invest 16.00 in Hastings Technology Metals on September 23, 2024 and sell it today you would earn a total of 4.00 from holding Hastings Technology Metals or generate 25.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hastings Technology Metals vs. NEW WORLD DEVCO
Performance |
Timeline |
Hastings Technology |
NEW WORLD DEVCO |
Hastings Technology and NEW WORLD Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hastings Technology and NEW WORLD
The main advantage of trading using opposite Hastings Technology and NEW WORLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hastings Technology position performs unexpectedly, NEW WORLD 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 NEW WORLD will offset losses from the drop in NEW WORLD's long position.Hastings Technology vs. BHP Group Limited | Hastings Technology vs. BHP Group Limited | Hastings Technology vs. Rio Tinto Group | Hastings Technology vs. Rio Tinto Group |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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