Correlation Between Hitek Global and Dave Warrants

Can any of the company-specific risk be diversified away by investing in both Hitek Global and Dave Warrants 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 Hitek Global and Dave Warrants into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hitek Global Ordinary and Dave Warrants, you can compare the effects of market volatilities on Hitek Global and Dave Warrants 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 Hitek Global with a short position of Dave Warrants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitek Global and Dave Warrants.

Diversification Opportunities for Hitek Global and Dave Warrants

-0.4

Correlation Coefficient

Hitek Global  Dave Warrants

Very good diversification

The 3 months correlation between Hitek and Dave is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hitek Global Ordinary and Dave Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Warrants and Hitek Global 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 Hitek Global Ordinary are associated (or correlated) with Dave Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Warrants has no effect on the direction of Hitek Global i.e., Hitek Global and Dave Warrants go up and down completely randomly.

Pair Corralation between Hitek Global and Dave Warrants

Given the investment horizon of 90 days Hitek Global is expected to generate 5.31 times less return on investment than Dave Warrants. But when comparing it to its historical volatility, Hitek Global Ordinary is 5.2 times less risky than Dave Warrants. It trades about 0.13 of its potential returns per unit of risk. Dave Warrants is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Dave Warrants on September 14, 2024 and sell it today you would earn a total of  3.00  from holding Dave Warrants or generate 21.43% return on investment over 90 days.

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

Hitek Global Ordinary  vs.  Dave Warrants

Hitek Global Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hitek Global Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Hitek Global is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Dave Warrants

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Warrants are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Dave Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hitek Global and Dave Warrants

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

The idea behind Hitek Global Ordinary and Dave Warrants 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.