Correlation Between Hilan and Matrix

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

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

Diversification Opportunities for Hilan and Matrix

0.74

Correlation Coefficient

Hilan  Matrix

Poor diversification

The 3 months correlation between Hilan and Matrix is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hilan and Matrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix and Hilan 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 Hilan are associated (or correlated) with Matrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix has no effect on the direction of Hilan i.e., Hilan and Matrix go up and down completely randomly.

Pair Corralation between Hilan and Matrix

Assuming the 90 days trading horizon Hilan is expected to generate 1.31 times less return on investment than Matrix. But when comparing it to its historical volatility, Hilan is 1.21 times less risky than Matrix. It trades about 0.07 of its potential returns per unit of risk. Matrix is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  829,090  in Matrix on December 30, 2024 and sell it today you would earn a total of  54,810  from holding Matrix or generate 6.61% return on investment over 90 days.

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

Hilan  vs.  Matrix

Hilan

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hilan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hilan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Matrix

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Matrix may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hilan and Matrix

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

The idea behind Hilan and Matrix 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.