Correlation Between Hi Lai and C Tech

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

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

Diversification Opportunities for Hi Lai and C Tech

-0.43

Correlation Coefficient

Hi Lai  C Tech

Very good diversification

The 3 months correlation between 1268 and 3625 is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hi Lai Foods Co and C Tech United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Tech United and Hi Lai 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 Hi Lai Foods Co are associated (or correlated) with C Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Tech United has no effect on the direction of Hi Lai i.e., Hi Lai and C Tech go up and down completely randomly.

Pair Corralation between Hi Lai and C Tech

Assuming the 90 days trading horizon Hi Lai Foods Co is expected to under-perform the C Tech. But the stock apears to be less risky and, when comparing its historical volatility, Hi Lai Foods Co is 7.35 times less risky than C Tech. The stock trades about -0.03 of its potential returns per unit of risk. The C Tech United is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,215  in C Tech United on September 6, 2024 and sell it today you would earn a total of  930.00  from holding C Tech United or generate 76.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Hi Lai Foods Co  vs.  C Tech United

Hi Lai Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hi Lai Foods Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hi Lai is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

C Tech United

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in C Tech United are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, C Tech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hi Lai and C Tech

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

The idea behind Hi Lai Foods Co and C Tech United 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.