Correlation Between MACOM Technology and Hope Education

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

By analyzing existing cross correlation between MACOM Technology Solutions and Hope Education Group, you can compare the effects of market volatilities on MACOM Technology and Hope Education 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 MACOM Technology with a short position of Hope Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Hope Education.

Diversification Opportunities for MACOM Technology and Hope Education

0.59

Correlation Coefficient

MACOM Technology  Hope Education

Very weak diversification

The 3 months correlation between MACOM and Hope is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Hope Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hope Education Group and MACOM Technology 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 MACOM Technology Solutions are associated (or correlated) with Hope Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hope Education Group has no effect on the direction of MACOM Technology i.e., MACOM Technology and Hope Education go up and down completely randomly.

Pair Corralation between MACOM Technology and Hope Education

Assuming the 90 days horizon MACOM Technology is expected to generate 2.3 times less return on investment than Hope Education. But when comparing it to its historical volatility, MACOM Technology Solutions is 2.03 times less risky than Hope Education. It trades about 0.17 of its potential returns per unit of risk. Hope Education Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1.05  in Hope Education Group on April 25, 2025 and sell it today you would earn a total of  0.65  from holding Hope Education Group or generate 61.9% return on investment over 90 days.

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

MACOM Technology Solutions  vs.  Hope Education Group

MACOM Technology Sol

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MACOM Technology Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MACOM Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Hope Education Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hope Education Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hope Education reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MACOM Technology and Hope Education

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

The idea behind MACOM Technology Solutions and Hope Education Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.