Correlation Between Hai An and Alphanam

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

By analyzing existing cross correlation between Hai An Transport and Alphanam ME, you can compare the effects of market volatilities on Hai An and Alphanam 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 Hai An with a short position of Alphanam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hai An and Alphanam.

Diversification Opportunities for Hai An and Alphanam

-0.88

Correlation Coefficient

Hai An  Alphanam

Pay attention - limited upside

The 3 months correlation between Hai and Alphanam is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hai An Transport and Alphanam ME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphanam ME and Hai An 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 Hai An Transport are associated (or correlated) with Alphanam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphanam ME has no effect on the direction of Hai An i.e., Hai An and Alphanam go up and down completely randomly.

Pair Corralation between Hai An and Alphanam

Assuming the 90 days trading horizon Hai An Transport is expected to generate 0.62 times more return on investment than Alphanam. However, Hai An Transport is 1.62 times less risky than Alphanam. It trades about 0.19 of its potential returns per unit of risk. Alphanam ME is currently generating about -0.13 per unit of risk. If you would invest  4,020,000  in Hai An Transport on September 23, 2024 and sell it today you would earn a total of  910,000  from holding Hai An Transport or generate 22.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	57.58%
Values	Daily Returns

Hai An Transport  vs.  Alphanam ME

Hai An Transport

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hai An Transport are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Hai An displayed solid returns over the last few months and may actually be approaching a breakup point.

Alphanam ME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphanam ME has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hai An and Alphanam

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

The idea behind Hai An Transport and Alphanam ME 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.