Correlation Between Loads and Hi Tech

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

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

Diversification Opportunities for Loads and Hi Tech

-0.4

Correlation Coefficient

Loads  Hi Tech

Very good diversification

The 3 months correlation between Loads and HTL is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Loads and Hi Tech Lubricants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Tech Lubricants and Loads 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 Loads are associated (or correlated) with Hi Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Tech Lubricants has no effect on the direction of Loads i.e., Loads and Hi Tech go up and down completely randomly.

Pair Corralation between Loads and Hi Tech

Assuming the 90 days trading horizon Loads is expected to generate 1.31 times more return on investment than Hi Tech. However, Loads is 1.31 times more volatile than Hi Tech Lubricants. It trades about 0.08 of its potential returns per unit of risk. Hi Tech Lubricants is currently generating about -0.09 per unit of risk. If you would invest  1,525  in Loads on December 30, 2024 and sell it today you would earn a total of  241.00  from holding Loads or generate 15.8% return on investment over 90 days.

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

Loads  vs.  Hi Tech Lubricants

Loads

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Loads are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Loads disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Loads and Hi Tech

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

The idea behind Loads and Hi Tech Lubricants 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.