Correlation Between First Asset and Harvest Tech

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

By analyzing existing cross correlation between First Asset Energy and Harvest Tech Achievers, you can compare the effects of market volatilities on First Asset and Harvest 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 First Asset with a short position of Harvest Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and Harvest Tech.

Diversification Opportunities for First Asset and Harvest Tech

-0.28

Correlation Coefficient

First Asset  Harvest Tech

Very good diversification

The 3 months correlation between First and Harvest is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Energy and Harvest Tech Achievers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Tech Achievers and First Asset 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 First Asset Energy are associated (or correlated) with Harvest Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Tech Achievers has no effect on the direction of First Asset i.e., First Asset and Harvest Tech go up and down completely randomly.

Pair Corralation between First Asset and Harvest Tech

Assuming the 90 days trading horizon First Asset is expected to generate 13.35 times less return on investment than Harvest Tech. In addition to that, First Asset is 1.0 times more volatile than Harvest Tech Achievers. It trades about 0.01 of its total potential returns per unit of risk. Harvest Tech Achievers is currently generating about 0.12 per unit of volatility. If you would invest  985.00  in Harvest Tech Achievers on September 26, 2024 and sell it today you would earn a total of  950.00  from holding Harvest Tech Achievers or generate 96.45% return on investment over 90 days.

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

First Asset Energy  vs.  Harvest Tech Achievers

First Asset Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Asset Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, First Asset is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Harvest Tech Achievers

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Tech Achievers are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Harvest Tech is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with First Asset and Harvest Tech

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

The idea behind First Asset Energy and Harvest Tech Achievers 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.