Correlation Between Dynamic Precision and Hi Lai

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

By analyzing existing cross correlation between Dynamic Precision Industry and Hi Lai Foods Co, you can compare the effects of market volatilities on Dynamic Precision and Hi Lai 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 Dynamic Precision with a short position of Hi Lai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Precision and Hi Lai.

Diversification Opportunities for Dynamic Precision and Hi Lai

-0.3

Correlation Coefficient

Dynamic Precision  Hi Lai

Very good diversification

The 3 months correlation between Dynamic and 1268 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Precision Industry and Hi Lai Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Lai Foods and Dynamic Precision 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 Dynamic Precision Industry are associated (or correlated) with Hi Lai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Lai Foods has no effect on the direction of Dynamic Precision i.e., Dynamic Precision and Hi Lai go up and down completely randomly.

Pair Corralation between Dynamic Precision and Hi Lai

Assuming the 90 days trading horizon Dynamic Precision Industry is expected to under-perform the Hi Lai. But the stock apears to be less risky and, when comparing its historical volatility, Dynamic Precision Industry is 1.42 times less risky than Hi Lai. The stock trades about -0.01 of its potential returns per unit of risk. The Hi Lai Foods Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  12,035  in Hi Lai Foods Co on October 4, 2024 and sell it today you would earn a total of  2,865  from holding Hi Lai Foods Co or generate 23.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Dynamic Precision Industry  vs.  Hi Lai Foods Co

Dynamic Precision

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Precision Industry are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Dynamic Precision is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hi Lai Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hi Lai Foods Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hi Lai 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 Dynamic Precision and Hi Lai

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

The idea behind Dynamic Precision Industry and Hi Lai Foods 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.