Correlation Between HeiTech Padu and Diversified Gateway

Can any of the company-specific risk be diversified away by investing in both HeiTech Padu and Diversified Gateway 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 HeiTech Padu and Diversified Gateway into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HeiTech Padu Bhd and Diversified Gateway Solutions, you can compare the effects of market volatilities on HeiTech Padu and Diversified Gateway 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 HeiTech Padu with a short position of Diversified Gateway. Check out your portfolio center. Please also check ongoing floating volatility patterns of HeiTech Padu and Diversified Gateway.

Diversification Opportunities for HeiTech Padu and Diversified Gateway

0.18

Correlation Coefficient

HeiTech Padu  Diversified Gateway

Average diversification

The 3 months correlation between HeiTech and Diversified is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding HeiTech Padu Bhd and Diversified Gateway Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Gateway and HeiTech Padu 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 HeiTech Padu Bhd are associated (or correlated) with Diversified Gateway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Gateway has no effect on the direction of HeiTech Padu i.e., HeiTech Padu and Diversified Gateway go up and down completely randomly.

Pair Corralation between HeiTech Padu and Diversified Gateway

Assuming the 90 days trading horizon HeiTech Padu Bhd is expected to generate 1.21 times more return on investment than Diversified Gateway. However, HeiTech Padu is 1.21 times more volatile than Diversified Gateway Solutions. It trades about 0.03 of its potential returns per unit of risk. Diversified Gateway Solutions is currently generating about 0.02 per unit of risk. If you would invest  299.00  in HeiTech Padu Bhd on September 15, 2024 and sell it today you would earn a total of  10.00  from holding HeiTech Padu Bhd or generate 3.34% return on investment over 90 days.

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

HeiTech Padu Bhd  vs.  Diversified Gateway Solutions

HeiTech Padu Bhd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HeiTech Padu Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, HeiTech Padu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Diversified Gateway

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Diversified Gateway Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Diversified Gateway is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with HeiTech Padu and Diversified Gateway

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

The idea behind HeiTech Padu Bhd and Diversified Gateway Solutions 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.