Correlation Between Hitech Development and SaltX Technology

Can any of the company-specific risk be diversified away by investing in both Hitech Development and SaltX Technology 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 Hitech Development and SaltX Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hitech Development Wireless and SaltX Technology Holding, you can compare the effects of market volatilities on Hitech Development and SaltX Technology 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 Hitech Development with a short position of SaltX Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitech Development and SaltX Technology.

Diversification Opportunities for Hitech Development and SaltX Technology

0.2

Correlation Coefficient

Hitech Development  SaltX Technology

Modest diversification

The 3 months correlation between Hitech and SaltX is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hitech Development Wireless and SaltX Technology Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SaltX Technology Holding and Hitech Development 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 Hitech Development Wireless are associated (or correlated) with SaltX Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SaltX Technology Holding has no effect on the direction of Hitech Development i.e., Hitech Development and SaltX Technology go up and down completely randomly.

Pair Corralation between Hitech Development and SaltX Technology

Assuming the 90 days trading horizon Hitech Development Wireless is expected to under-perform the SaltX Technology. In addition to that, Hitech Development is 2.13 times more volatile than SaltX Technology Holding. It trades about -0.28 of its total potential returns per unit of risk. SaltX Technology Holding is currently generating about -0.11 per unit of volatility. If you would invest  391.00  in SaltX Technology Holding on October 5, 2024 and sell it today you would lose (34.00) from holding SaltX Technology Holding or give up 8.7% of portfolio value over 90 days.

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

Hitech Development Wireless  vs.  SaltX Technology Holding

Hitech Development

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Hitech Development Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Hitech Development unveiled solid returns over the last few months and may actually be approaching a breakup point.

SaltX Technology Holding

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days SaltX Technology Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak essential indicators, SaltX Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hitech Development and SaltX Technology

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

The idea behind Hitech Development Wireless and SaltX Technology Holding 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.