Correlation Between HVC Investment and Picomat Plastic

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

Diversification Opportunities for HVC Investment and Picomat Plastic

0.47

Correlation Coefficient

HVC Investment  Picomat Plastic

Very weak diversification

The 3 months correlation between HVC and Picomat is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding HVC Investment and and Picomat Plastic JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Picomat Plastic 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 Picomat Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Picomat Plastic JSC has no effect on the direction of HVC Investment i.e., HVC Investment and Picomat Plastic go up and down completely randomly.

Pair Corralation between HVC Investment and Picomat Plastic

Assuming the 90 days trading horizon HVC Investment and is expected to generate 2.92 times more return on investment than Picomat Plastic. However, HVC Investment is 2.92 times more volatile than Picomat Plastic JSC. It trades about 0.18 of its potential returns per unit of risk. Picomat Plastic JSC is currently generating about 0.07 per unit of risk. If you would invest  845,995  in HVC Investment and on October 11, 2024 and sell it today you would earn a total of  98,005  from holding HVC Investment and or generate 11.58% return on investment over 90 days.

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

HVC Investment and  vs.  Picomat Plastic JSC

HVC Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HVC Investment and are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, HVC Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Picomat Plastic JSC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Picomat Plastic JSC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Picomat Plastic 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 Picomat Plastic

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

The idea behind HVC Investment and and Picomat Plastic 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.