Correlation Between Hota Industrial and Laster Tech

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

By analyzing existing cross correlation between Hota Industrial Mfg and Laster Tech Corp, you can compare the effects of market volatilities on Hota Industrial and Laster 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 Hota Industrial with a short position of Laster Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hota Industrial and Laster Tech.

Diversification Opportunities for Hota Industrial and Laster Tech

-0.14

Correlation Coefficient

Hota Industrial  Laster Tech

Good diversification

The 3 months correlation between Hota and Laster is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hota Industrial Mfg and Laster Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laster Tech Corp and Hota Industrial 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 Hota Industrial Mfg are associated (or correlated) with Laster Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laster Tech Corp has no effect on the direction of Hota Industrial i.e., Hota Industrial and Laster Tech go up and down completely randomly.

Pair Corralation between Hota Industrial and Laster Tech

Assuming the 90 days trading horizon Hota Industrial Mfg is expected to under-perform the Laster Tech. In addition to that, Hota Industrial is 1.94 times more volatile than Laster Tech Corp. It trades about -0.04 of its total potential returns per unit of risk. Laster Tech Corp is currently generating about 0.01 per unit of volatility. If you would invest  3,827  in Laster Tech Corp on August 31, 2024 and sell it today you would earn a total of  3.00  from holding Laster Tech Corp or generate 0.08% return on investment over 90 days.

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

Hota Industrial Mfg  vs.  Laster Tech Corp

Hota Industrial Mfg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hota Industrial Mfg has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Laster Tech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laster Tech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Laster Tech 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 Hota Industrial and Laster Tech

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

The idea behind Hota Industrial Mfg and Laster Tech Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.