Correlation Between Chroma ATE and Hota Industrial

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Can any of the company-specific risk be diversified away by investing in both Chroma ATE and Hota Industrial 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 Chroma ATE and Hota Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chroma ATE and Hota Industrial Mfg, you can compare the effects of market volatilities on Chroma ATE and Hota Industrial 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 Chroma ATE with a short position of Hota Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chroma ATE and Hota Industrial.

Diversification Opportunities for Chroma ATE and Hota Industrial

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Chroma and Hota is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chroma ATE and Hota Industrial Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hota Industrial Mfg and Chroma ATE 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 Chroma ATE are associated (or correlated) with Hota Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hota Industrial Mfg has no effect on the direction of Chroma ATE i.e., Chroma ATE and Hota Industrial go up and down completely randomly.

Pair Corralation between Chroma ATE and Hota Industrial

Assuming the 90 days trading horizon Chroma ATE is expected to generate 0.92 times more return on investment than Hota Industrial. However, Chroma ATE is 1.09 times less risky than Hota Industrial. It trades about 0.13 of its potential returns per unit of risk. Hota Industrial Mfg is currently generating about 0.0 per unit of risk. If you would invest  33,200  in Chroma ATE on August 31, 2024 and sell it today you would earn a total of  8,050  from holding Chroma ATE or generate 24.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Chroma ATE  vs.  Hota Industrial Mfg

 Performance 
       Timeline  
Chroma ATE 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Chroma ATE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chroma ATE showed solid returns over the last few months and may actually be approaching a breakup point.
Hota Industrial Mfg 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 fairly stable basic indicators, Hota Industrial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chroma ATE and Hota Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chroma ATE and Hota Industrial

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

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