Correlation Between Pro Dex and Hoya Corp

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

By analyzing existing cross correlation between Pro Dex and Hoya Corp, you can compare the effects of market volatilities on Pro Dex and Hoya Corp 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 Pro Dex with a short position of Hoya Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro Dex and Hoya Corp.

Diversification Opportunities for Pro Dex and Hoya Corp

-0.43

Correlation Coefficient

Pro Dex  Hoya Corp

Very good diversification

The 3 months correlation between Pro and Hoya is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pro Dex and Hoya Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoya Corp and Pro Dex 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 Pro Dex are associated (or correlated) with Hoya Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoya Corp has no effect on the direction of Pro Dex i.e., Pro Dex and Hoya Corp go up and down completely randomly.

Pair Corralation between Pro Dex and Hoya Corp

Given the investment horizon of 90 days Pro Dex is expected to generate 3.51 times more return on investment than Hoya Corp. However, Pro Dex is 3.51 times more volatile than Hoya Corp. It trades about 0.33 of its potential returns per unit of risk. Hoya Corp is currently generating about -0.09 per unit of risk. If you would invest  3,021  in Pro Dex on August 27, 2024 and sell it today you would earn a total of  1,654  from holding Pro Dex or generate 54.75% return on investment over 90 days.

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

Pro Dex  vs.  Hoya Corp

Pro Dex

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Dex are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Pro Dex showed solid returns over the last few months and may actually be approaching a breakup point.

Hoya Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hoya Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Pro Dex and Hoya Corp

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

The idea behind Pro Dex and Hoya Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.