Correlation Between Hitechpros and Entech SE

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

By analyzing existing cross correlation between Hitechpros and Entech SE SAS, you can compare the effects of market volatilities on Hitechpros and Entech SE 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 Hitechpros with a short position of Entech SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitechpros and Entech SE.

Diversification Opportunities for Hitechpros and Entech SE

0.63

Correlation Coefficient

Hitechpros  Entech SE

Poor diversification

The 3 months correlation between Hitechpros and Entech is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hitechpros and Entech SE SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entech SE SAS and Hitechpros 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 Hitechpros are associated (or correlated) with Entech SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entech SE SAS has no effect on the direction of Hitechpros i.e., Hitechpros and Entech SE go up and down completely randomly.

Pair Corralation between Hitechpros and Entech SE

Assuming the 90 days trading horizon Hitechpros is expected to generate 0.38 times more return on investment than Entech SE. However, Hitechpros is 2.65 times less risky than Entech SE. It trades about -0.06 of its potential returns per unit of risk. Entech SE SAS is currently generating about -0.02 per unit of risk. If you would invest  1,620  in Hitechpros on September 14, 2024 and sell it today you would lose (100.00) from holding Hitechpros or give up 6.17% of portfolio value over 90 days.

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

Hitechpros  vs.  Entech SE SAS

Hitechpros

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hitechpros has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Hitechpros is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Entech SE SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entech SE SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Entech SE is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hitechpros and Entech SE

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

The idea behind Hitechpros and Entech SE SAS 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.