Correlation Between I Jang and Hi Clearance

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

By analyzing existing cross correlation between I Jang Industrial and Hi Clearance, you can compare the effects of market volatilities on I Jang and Hi Clearance 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 I Jang with a short position of Hi Clearance. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Jang and Hi Clearance.

Diversification Opportunities for I Jang and Hi Clearance

-0.31

Correlation Coefficient

I Jang  Hi Clearance

Very good diversification

The 3 months correlation between 8342 and 1788 is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding I Jang Industrial and Hi Clearance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Clearance and I Jang 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 I Jang Industrial are associated (or correlated) with Hi Clearance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Clearance has no effect on the direction of I Jang i.e., I Jang and Hi Clearance go up and down completely randomly.

Pair Corralation between I Jang and Hi Clearance

Assuming the 90 days trading horizon I Jang Industrial is expected to under-perform the Hi Clearance. In addition to that, I Jang is 2.51 times more volatile than Hi Clearance. It trades about -0.03 of its total potential returns per unit of risk. Hi Clearance is currently generating about 0.17 per unit of volatility. If you would invest  13,900  in Hi Clearance on December 21, 2024 and sell it today you would earn a total of  500.00  from holding Hi Clearance or generate 3.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.21%
Values	Daily Returns

I Jang Industrial  vs.  Hi Clearance

I Jang Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days I Jang Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, I Jang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hi Clearance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hi Clearance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hi Clearance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with I Jang and Hi Clearance

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

The idea behind I Jang Industrial and Hi Clearance 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.