Correlation Between Ha Long and Innovative Technology

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

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

Diversification Opportunities for Ha Long and Innovative Technology

-0.3

Correlation Coefficient

Ha Long  Innovative Technology

Very good diversification

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

Pair Corralation between Ha Long and Innovative Technology

Assuming the 90 days trading horizon Ha Long Investment is expected to generate 0.66 times more return on investment than Innovative Technology. However, Ha Long Investment is 1.52 times less risky than Innovative Technology. It trades about -0.06 of its potential returns per unit of risk. Innovative Technology Development is currently generating about -0.05 per unit of risk. If you would invest  293,000  in Ha Long Investment on September 21, 2024 and sell it today you would lose (25,000) from holding Ha Long Investment or give up 8.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ha Long Investment  vs.  Innovative Technology Developm

Ha Long Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ha Long Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Ha Long is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Innovative Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Technology Development are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Innovative Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ha Long and Innovative Technology

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

The idea behind Ha Long Investment and Innovative Technology Development 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.