Correlation Between MED PAPER and HIGHTECH PAYMENT

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

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

Diversification Opportunities for MED PAPER and HIGHTECH PAYMENT

0.49

Correlation Coefficient

MED PAPER  HIGHTECH PAYMENT

Very weak diversification

The 3 months correlation between MED and HIGHTECH is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding MED PAPER and HIGHTECH PAYMENT SYSTEMS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIGHTECH PAYMENT SYSTEMS and MED PAPER 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 MED PAPER are associated (or correlated) with HIGHTECH PAYMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIGHTECH PAYMENT SYSTEMS has no effect on the direction of MED PAPER i.e., MED PAPER and HIGHTECH PAYMENT go up and down completely randomly.

Pair Corralation between MED PAPER and HIGHTECH PAYMENT

Assuming the 90 days trading horizon MED PAPER is expected to generate 1.32 times more return on investment than HIGHTECH PAYMENT. However, MED PAPER is 1.32 times more volatile than HIGHTECH PAYMENT SYSTEMS. It trades about -0.05 of its potential returns per unit of risk. HIGHTECH PAYMENT SYSTEMS is currently generating about -0.08 per unit of risk. If you would invest  2,151  in MED PAPER on September 5, 2024 and sell it today you would lose (141.00) from holding MED PAPER or give up 6.56% of portfolio value over 90 days.

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

MED PAPER  vs.  HIGHTECH PAYMENT SYSTEMS

MED PAPER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MED PAPER has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, MED PAPER is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

HIGHTECH PAYMENT SYSTEMS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HIGHTECH PAYMENT SYSTEMS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with MED PAPER and HIGHTECH PAYMENT

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

The idea behind MED PAPER and HIGHTECH PAYMENT SYSTEMS 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..