Correlation Between Alkali Metals and Hi-Tech Gears

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

By analyzing existing cross correlation between Alkali Metals Limited and The Hi Tech Gears, you can compare the effects of market volatilities on Alkali Metals and Hi-Tech Gears 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 Alkali Metals with a short position of Hi-Tech Gears. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkali Metals and Hi-Tech Gears.

Diversification Opportunities for Alkali Metals and Hi-Tech Gears

0.95

Correlation Coefficient

Alkali Metals  Hi-Tech Gears

Almost no diversification

The 3 months correlation between Alkali and Hi-Tech is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Alkali Metals Limited and The Hi Tech Gears in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi-Tech Gears and Alkali Metals 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 Alkali Metals Limited are associated (or correlated) with Hi-Tech Gears. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi-Tech Gears has no effect on the direction of Alkali Metals i.e., Alkali Metals and Hi-Tech Gears go up and down completely randomly.

Pair Corralation between Alkali Metals and Hi-Tech Gears

Assuming the 90 days trading horizon Alkali Metals Limited is expected to under-perform the Hi-Tech Gears. In addition to that, Alkali Metals is 1.1 times more volatile than The Hi Tech Gears. It trades about -0.19 of its total potential returns per unit of risk. The Hi Tech Gears is currently generating about -0.21 per unit of volatility. If you would invest  84,425  in The Hi Tech Gears on December 2, 2024 and sell it today you would lose (22,365) from holding The Hi Tech Gears or give up 26.49% of portfolio value over 90 days.

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

Alkali Metals Limited  vs.  The Hi Tech Gears

Alkali Metals Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alkali Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hi-Tech Gears

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Hi Tech Gears has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Alkali Metals and Hi-Tech Gears

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

The idea behind Alkali Metals Limited and The Hi Tech Gears 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .