Correlation Between Main Street and HopTo

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

By analyzing existing cross correlation between Main Street Capital and hopTo Inc, you can compare the effects of market volatilities on Main Street and HopTo 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 Main Street with a short position of HopTo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and HopTo.

Diversification Opportunities for Main Street and HopTo

-0.21

Correlation Coefficient

Main Street  HopTo

Very good diversification

The 3 months correlation between Main and HopTo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and hopTo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on hopTo Inc and Main Street 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 Main Street Capital are associated (or correlated) with HopTo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of hopTo Inc has no effect on the direction of Main Street i.e., Main Street and HopTo go up and down completely randomly.

Pair Corralation between Main Street and HopTo

If you would invest  4,616  in Main Street Capital on January 26, 2024 and sell it today you would earn a total of  264.00  from holding Main Street Capital or generate 5.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Main Street Capital  vs.  hopTo Inc

Main Street Capital

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Main Street Capital are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Main Street may actually be approaching a critical reversion point that can send shares even higher in May 2024.

hopTo Inc

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days hopTo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, HopTo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Main Street and HopTo

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

The idea behind Main Street Capital and hopTo Inc 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.