Correlation Between Hi Tech and Fateh Sports

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

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

Diversification Opportunities for Hi Tech and Fateh Sports

0.63

Correlation Coefficient

Hi Tech  Fateh Sports

Poor diversification

The 3 months correlation between HTL and Fateh is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hi Tech Lubricants and Fateh Sports Wear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fateh Sports Wear and Hi Tech 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 Hi Tech Lubricants are associated (or correlated) with Fateh Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fateh Sports Wear has no effect on the direction of Hi Tech i.e., Hi Tech and Fateh Sports go up and down completely randomly.

Pair Corralation between Hi Tech and Fateh Sports

Assuming the 90 days trading horizon Hi Tech Lubricants is expected to generate 0.55 times more return on investment than Fateh Sports. However, Hi Tech Lubricants is 1.83 times less risky than Fateh Sports. It trades about -0.09 of its potential returns per unit of risk. Fateh Sports Wear is currently generating about -0.08 per unit of risk. If you would invest  5,206  in Hi Tech Lubricants on December 29, 2024 and sell it today you would lose (790.00) from holding Hi Tech Lubricants or give up 15.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	34.92%
Values	Daily Returns

Hi Tech Lubricants  vs.  Fateh Sports Wear

Hi Tech Lubricants

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hi Tech Lubricants has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Fateh Sports Wear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fateh Sports Wear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hi Tech and Fateh Sports

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

The idea behind Hi Tech Lubricants and Fateh Sports Wear 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.