Correlation Between HMTNew Technical and Sportsoul

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

By analyzing existing cross correlation between HMTNew Technical and Sportsoul Co Ltd, you can compare the effects of market volatilities on HMTNew Technical and Sportsoul 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 HMTNew Technical with a short position of Sportsoul. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMTNew Technical and Sportsoul.

Diversification Opportunities for HMTNew Technical and Sportsoul

0.89

Correlation Coefficient

HMTNew Technical  Sportsoul

Very poor diversification

The 3 months correlation between HMTNew and Sportsoul is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding HMTNew Technical and Sportsoul Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsoul and HMTNew Technical 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 HMTNew Technical are associated (or correlated) with Sportsoul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsoul has no effect on the direction of HMTNew Technical i.e., HMTNew Technical and Sportsoul go up and down completely randomly.

Pair Corralation between HMTNew Technical and Sportsoul

Assuming the 90 days trading horizon HMTNew Technical is expected to generate 1.17 times more return on investment than Sportsoul. However, HMTNew Technical is 1.17 times more volatile than Sportsoul Co Ltd. It trades about 0.21 of its potential returns per unit of risk. Sportsoul Co Ltd is currently generating about 0.17 per unit of risk. If you would invest  1,893  in HMTNew Technical on September 12, 2024 and sell it today you would earn a total of  1,157  from holding HMTNew Technical or generate 61.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

HMTNew Technical  vs.  Sportsoul Co Ltd

HMTNew Technical

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HMTNew Technical are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HMTNew Technical sustained solid returns over the last few months and may actually be approaching a breakup point.

Sportsoul

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sportsoul Co Ltd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sportsoul sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HMTNew Technical and Sportsoul

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

The idea behind HMTNew Technical and Sportsoul Co Ltd 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.