Correlation Between Hitek Global and SmartRent

Can any of the company-specific risk be diversified away by investing in both Hitek Global and SmartRent 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 SmartRent 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 SmartRent, you can compare the effects of market volatilities on Hitek Global and SmartRent 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 SmartRent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitek Global and SmartRent.

Diversification Opportunities for Hitek Global and SmartRent

0.18

Correlation Coefficient

Hitek Global  SmartRent

Average diversification

The 3 months correlation between Hitek and SmartRent is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hitek Global Ordinary and SmartRent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartRent 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 SmartRent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartRent has no effect on the direction of Hitek Global i.e., Hitek Global and SmartRent go up and down completely randomly.

Pair Corralation between Hitek Global and SmartRent

Given the investment horizon of 90 days Hitek Global Ordinary is expected to generate 3.57 times more return on investment than SmartRent. However, Hitek Global is 3.57 times more volatile than SmartRent. It trades about 0.04 of its potential returns per unit of risk. SmartRent is currently generating about 0.0 per unit of risk. If you would invest  500.00  in Hitek Global Ordinary on October 10, 2024 and sell it today you would lose (358.00) from holding Hitek Global Ordinary or give up 71.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.92%
Values	Daily Returns

Hitek Global Ordinary  vs.  SmartRent

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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

SmartRent

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SmartRent are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, SmartRent may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hitek Global and SmartRent

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

The idea behind Hitek Global Ordinary and SmartRent 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.