Correlation Between Model N and Hitek Global
Can any of the company-specific risk be diversified away by investing in both Model N and Hitek Global 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 Model N and Hitek Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Model N and Hitek Global Ordinary, you can compare the effects of market volatilities on Model N and Hitek Global 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 Model N with a short position of Hitek Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Model N and Hitek Global.
Diversification Opportunities for Model N and Hitek Global
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Model and Hitek is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Model N and Hitek Global Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitek Global Ordinary and Model N 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 Model N are associated (or correlated) with Hitek Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitek Global Ordinary has no effect on the direction of Model N i.e., Model N and Hitek Global go up and down completely randomly.
Pair Corralation between Model N and Hitek Global
Given the investment horizon of 90 days Model N is expected to generate 0.25 times more return on investment than Hitek Global. However, Model N is 4.02 times less risky than Hitek Global. It trades about 0.15 of its potential returns per unit of risk. Hitek Global Ordinary is currently generating about -0.03 per unit of risk. If you would invest 2,766 in Model N on February 1, 2024 and sell it today you would earn a total of 199.00 from holding Model N or generate 7.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Model N vs. Hitek Global Ordinary
Performance |
Timeline |
Model N |
Hitek Global Ordinary |
Model N and Hitek Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Model N and Hitek Global
The main advantage of trading using opposite Model N and Hitek Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Model N position performs unexpectedly, Hitek Global 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 Hitek Global will offset losses from the drop in Hitek Global's long position.The idea behind Model N and Hitek Global Ordinary 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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