Correlation Between Hi Lai and Dimerco Data

Can any of the company-specific risk be diversified away by investing in both Hi Lai and Dimerco Data 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 Dimerco Data 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 Dimerco Data System, you can compare the effects of market volatilities on Hi Lai and Dimerco Data 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 Dimerco Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Lai and Dimerco Data.

Diversification Opportunities for Hi Lai and Dimerco Data

0.08

Correlation Coefficient

Hi Lai  Dimerco Data

Significant diversification

The 3 months correlation between 1268 and Dimerco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hi Lai Foods Co and Dimerco Data System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimerco Data System 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 Dimerco Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimerco Data System has no effect on the direction of Hi Lai i.e., Hi Lai and Dimerco Data go up and down completely randomly.

Pair Corralation between Hi Lai and Dimerco Data

Assuming the 90 days trading horizon Hi Lai Foods Co is expected to under-perform the Dimerco Data. But the stock apears to be less risky and, when comparing its historical volatility, Hi Lai Foods Co is 2.35 times less risky than Dimerco Data. The stock trades about -0.04 of its potential returns per unit of risk. The Dimerco Data System is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  11,850  in Dimerco Data System on September 30, 2024 and sell it today you would earn a total of  50.00  from holding Dimerco Data System or generate 0.42% return on investment over 90 days.

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

Hi Lai Foods Co  vs.  Dimerco Data System

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 newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Dimerco Data System

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hi Lai and Dimerco Data

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

The idea behind Hi Lai Foods Co and Dimerco Data 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.