Correlation Between Tibet Huayu and Lens Technology

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

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

Diversification Opportunities for Tibet Huayu and Lens Technology

0.58

Correlation Coefficient

Tibet Huayu  Lens Technology

Very weak diversification

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

Pair Corralation between Tibet Huayu and Lens Technology

Assuming the 90 days trading horizon Tibet Huayu Mining is expected to under-perform the Lens Technology. But the stock apears to be less risky and, when comparing its historical volatility, Tibet Huayu Mining is 1.05 times less risky than Lens Technology. The stock trades about -0.2 of its potential returns per unit of risk. The Lens Technology Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,990  in Lens Technology Co on September 27, 2024 and sell it today you would earn a total of  217.00  from holding Lens Technology Co or generate 10.9% return on investment over 90 days.

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

Tibet Huayu Mining  vs.  Lens Technology Co

Tibet Huayu Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tibet Huayu Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tibet Huayu sustained solid returns over the last few months and may actually be approaching a breakup point.

Lens Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lens Technology Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lens Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tibet Huayu and Lens Technology

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

The idea behind Tibet Huayu Mining and Lens Technology 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..