Correlation Between Fateh Sports and Hi Tech

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

By analyzing existing cross correlation between Fateh Sports Wear and Hi Tech Lubricants, you can compare the effects of market volatilities on Fateh Sports and Hi 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 Fateh Sports with a short position of Hi Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fateh Sports and Hi Tech.

Diversification Opportunities for Fateh Sports and Hi Tech

0.57

Correlation Coefficient

Fateh Sports  Hi Tech

Very weak diversification

The 3 months correlation between Fateh and HTL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fateh Sports Wear and Hi Tech Lubricants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Tech Lubricants and Fateh Sports 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 Fateh Sports Wear are associated (or correlated) with Hi Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Tech Lubricants has no effect on the direction of Fateh Sports i.e., Fateh Sports and Hi Tech go up and down completely randomly.

Pair Corralation between Fateh Sports and Hi Tech

Assuming the 90 days trading horizon Fateh Sports Wear is expected to under-perform the Hi Tech. In addition to that, Fateh Sports is 1.16 times more volatile than Hi Tech Lubricants. It trades about -0.05 of its total potential returns per unit of risk. Hi Tech Lubricants is currently generating about 0.17 per unit of volatility. If you would invest  3,920  in Hi Tech Lubricants on September 12, 2024 and sell it today you would earn a total of  1,736  from holding Hi Tech Lubricants or generate 44.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	36.51%
Values	Daily Returns

Fateh Sports Wear  vs.  Hi Tech Lubricants

Fateh Sports Wear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fateh Sports Wear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hi Tech Lubricants

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hi Tech Lubricants are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Hi Tech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fateh Sports and Hi Tech

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

The idea behind Fateh Sports Wear and Hi Tech Lubricants 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .