Correlation Between HEMISPHERE EGY and AOYAMA TRADING

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

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

Diversification Opportunities for HEMISPHERE EGY and AOYAMA TRADING

0.39

Correlation Coefficient

HEMISPHERE EGY  AOYAMA TRADING

Weak diversification

The 3 months correlation between HEMISPHERE and AOYAMA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding HEMISPHERE EGY and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING and HEMISPHERE EGY 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 HEMISPHERE EGY are associated (or correlated) with AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of HEMISPHERE EGY i.e., HEMISPHERE EGY and AOYAMA TRADING go up and down completely randomly.

Pair Corralation between HEMISPHERE EGY and AOYAMA TRADING

Assuming the 90 days trading horizon HEMISPHERE EGY is expected to generate 20.07 times less return on investment than AOYAMA TRADING. But when comparing it to its historical volatility, HEMISPHERE EGY is 3.65 times less risky than AOYAMA TRADING. It trades about 0.04 of its potential returns per unit of risk. AOYAMA TRADING is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  780.00  in AOYAMA TRADING on October 25, 2024 and sell it today you would earn a total of  550.00  from holding AOYAMA TRADING or generate 70.51% return on investment over 90 days.

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

HEMISPHERE EGY  vs.  AOYAMA TRADING

HEMISPHERE EGY

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HEMISPHERE EGY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, HEMISPHERE EGY is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

AOYAMA TRADING

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AOYAMA TRADING are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AOYAMA TRADING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HEMISPHERE EGY and AOYAMA TRADING

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

The idea behind HEMISPHERE EGY and AOYAMA TRADING 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.