Correlation Between HVC Investment and FIT INVEST

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

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

Diversification Opportunities for HVC Investment and FIT INVEST

0.18

Correlation Coefficient

HVC Investment  FIT INVEST

Average diversification

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

Pair Corralation between HVC Investment and FIT INVEST

Assuming the 90 days trading horizon HVC Investment and is expected to generate 0.96 times more return on investment than FIT INVEST. However, HVC Investment and is 1.04 times less risky than FIT INVEST. It trades about 0.07 of its potential returns per unit of risk. FIT INVEST JSC is currently generating about 0.03 per unit of risk. If you would invest  469,000  in HVC Investment and on September 16, 2024 and sell it today you would earn a total of  407,000  from holding HVC Investment and or generate 86.78% return on investment over 90 days.

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

HVC Investment and  vs.  FIT INVEST JSC

HVC Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HVC Investment and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, HVC Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

FIT INVEST JSC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FIT INVEST JSC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, FIT INVEST is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with HVC Investment and FIT INVEST

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

The idea behind HVC Investment and and FIT INVEST JSC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.