Correlation Between HIM International and Ablerex Electronics
Can any of the company-specific risk be diversified away by investing in both HIM International and Ablerex Electronics 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 HIM International and Ablerex Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HIM International Music and Ablerex Electronics Co, you can compare the effects of market volatilities on HIM International and Ablerex Electronics 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 HIM International with a short position of Ablerex Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of HIM International and Ablerex Electronics.
Diversification Opportunities for HIM International and Ablerex Electronics
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HIM and Ablerex is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding HIM International Music and Ablerex Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ablerex Electronics and HIM International 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 HIM International Music are associated (or correlated) with Ablerex Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ablerex Electronics has no effect on the direction of HIM International i.e., HIM International and Ablerex Electronics go up and down completely randomly.
Pair Corralation between HIM International and Ablerex Electronics
Assuming the 90 days trading horizon HIM International Music is expected to generate 0.85 times more return on investment than Ablerex Electronics. However, HIM International Music is 1.18 times less risky than Ablerex Electronics. It trades about 0.35 of its potential returns per unit of risk. Ablerex Electronics Co is currently generating about 0.07 per unit of risk. If you would invest 11,450 in HIM International Music on December 5, 2024 and sell it today you would earn a total of 750.00 from holding HIM International Music or generate 6.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
HIM International Music vs. Ablerex Electronics Co
Performance |
Timeline |
HIM International Music |
Ablerex Electronics |
HIM International and Ablerex Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HIM International and Ablerex Electronics
The main advantage of trading using opposite HIM International and Ablerex Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HIM International position performs unexpectedly, Ablerex Electronics 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 Ablerex Electronics will offset losses from the drop in Ablerex Electronics' long position.HIM International vs. Shih Kuen Plastics | HIM International vs. Ocean Plastics Co | HIM International vs. Xxentria Technology Materials | HIM International vs. Champion Building Materials |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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