Correlation Between Hywin Holdings and Altisource Asset

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

By analyzing existing cross correlation between Hywin Holdings Ltd and Altisource Asset Management, you can compare the effects of market volatilities on Hywin Holdings and Altisource Asset 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 Hywin Holdings with a short position of Altisource Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hywin Holdings and Altisource Asset.

Diversification Opportunities for Hywin Holdings and Altisource Asset

0.25

Correlation Coefficient

Hywin Holdings  Altisource Asset

Modest diversification

The 24 months correlation between Hywin and Altisource is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hywin Holdings Ltd and Altisource Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altisource Asset Man and Hywin Holdings 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 Hywin Holdings Ltd are associated (or correlated) with Altisource Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altisource Asset Man has no effect on the direction of Hywin Holdings i.e., Hywin Holdings and Altisource Asset go up and down completely randomly.

Pair Corralation between Hywin Holdings and Altisource Asset

Considering the 90-day investment horizon Hywin Holdings Ltd is expected to under-perform the Altisource Asset. But the stock apears to be less risky and, when comparing its historical volatility, Hywin Holdings Ltd is 1.13 times less risky than Altisource Asset. The stock trades about -0.36 of its potential returns per unit of risk. The Altisource Asset Management is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  353.00  in Altisource Asset Management on January 19, 2024 and sell it today you would lose (31.00) from holding Altisource Asset Management or give up 8.78% of portfolio value over 90 days.

Time Period	24 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hywin Holdings Ltd  vs.  Altisource Asset Management

Hywin Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hywin Holdings Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Altisource Asset Man

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Altisource Asset Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Altisource Asset exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hywin Holdings and Altisource Asset

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

The idea behind Hywin Holdings Ltd and Altisource Asset Management 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.