Correlation Between Hannstar Display and Wonderful

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Can any of the company-specific risk be diversified away by investing in both Hannstar Display and Wonderful 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 Display and Wonderful into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannstar Display Corp and Wonderful Hi Tech Co, you can compare the effects of market volatilities on Hannstar Display and Wonderful 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 Display with a short position of Wonderful. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannstar Display and Wonderful.

Diversification Opportunities for Hannstar Display and Wonderful

HannstarWonderfulDiversified AwayHannstarWonderfulDiversified Away100%
0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Hannstar and Wonderful is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hannstar Display Corp and Wonderful Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonderful Hi Tech and Hannstar Display 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 Display Corp are associated (or correlated) with Wonderful. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonderful Hi Tech has no effect on the direction of Hannstar Display i.e., Hannstar Display and Wonderful go up and down completely randomly.

Pair Corralation between Hannstar Display and Wonderful

Assuming the 90 days trading horizon Hannstar Display Corp is expected to under-perform the Wonderful. But the stock apears to be less risky and, when comparing its historical volatility, Hannstar Display Corp is 1.69 times less risky than Wonderful. The stock trades about -0.12 of its potential returns per unit of risk. The Wonderful Hi Tech Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,760  in Wonderful Hi Tech Co on September 15, 2024 and sell it today you would lose (250.00) from holding Wonderful Hi Tech Co or give up 6.65% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Hannstar Display Corp  vs.  Wonderful Hi Tech Co

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -505
JavaScript chart by amCharts 3.21.156116 6190
       Timeline  
Hannstar Display Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
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Very Weak
Over the last 90 days Hannstar Display Corp 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec8.48.68.899.29.49.6
Wonderful Hi Tech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wonderful Hi Tech Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Wonderful is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec343536373839

Hannstar Display and Wonderful Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.21-1.67-1.13-0.59-0.05530.450.991.532.072.61 0.080.100.120.140.160.180.20
JavaScript chart by amCharts 3.21.156116 6190
       Returns  

Pair Trading with Hannstar Display and Wonderful

The main advantage of trading using opposite Hannstar Display and Wonderful positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannstar Display position performs unexpectedly, Wonderful 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 Wonderful will offset losses from the drop in Wonderful's long position.
The idea behind Hannstar Display Corp and Wonderful Hi Tech 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.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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