Correlation Between Total Soft and HyVision System

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

By analyzing existing cross correlation between Total Soft Bank and HyVision System, you can compare the effects of market volatilities on Total Soft and HyVision System 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 Total Soft with a short position of HyVision System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and HyVision System.

Diversification Opportunities for Total Soft and HyVision System

-0.08

Correlation Coefficient

Total Soft  HyVision System

Good diversification

The 3 months correlation between Total and HyVision is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and HyVision System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HyVision System and Total Soft 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 Total Soft Bank are associated (or correlated) with HyVision System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HyVision System has no effect on the direction of Total Soft i.e., Total Soft and HyVision System go up and down completely randomly.

Pair Corralation between Total Soft and HyVision System

Assuming the 90 days trading horizon Total Soft Bank is expected to generate 1.43 times more return on investment than HyVision System. However, Total Soft is 1.43 times more volatile than HyVision System. It trades about 0.07 of its potential returns per unit of risk. HyVision System is currently generating about 0.0 per unit of risk. If you would invest  479,500  in Total Soft Bank on September 23, 2024 and sell it today you would earn a total of  402,500  from holding Total Soft Bank or generate 83.94% return on investment over 90 days.

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

Total Soft Bank  vs.  HyVision System

Total Soft Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Total Soft Bank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Total Soft sustained solid returns over the last few months and may actually be approaching a breakup point.

HyVision System

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HyVision System are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HyVision System is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Total Soft and HyVision System

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

The idea behind Total Soft Bank and HyVision System 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.