Correlation Between AU Small and Hathway Cable

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

By analyzing existing cross correlation between AU Small Finance and Hathway Cable Datacom, you can compare the effects of market volatilities on AU Small and Hathway Cable 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 AU Small with a short position of Hathway Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Small and Hathway Cable.

Diversification Opportunities for AU Small and Hathway Cable

0.65

Correlation Coefficient

AU Small  Hathway Cable

Poor diversification

The 3 months correlation between AUBANK and Hathway is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding AU Small Finance and Hathway Cable Datacom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hathway Cable Datacom and AU Small 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 AU Small Finance are associated (or correlated) with Hathway Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hathway Cable Datacom has no effect on the direction of AU Small i.e., AU Small and Hathway Cable go up and down completely randomly.

Pair Corralation between AU Small and Hathway Cable

Assuming the 90 days trading horizon AU Small is expected to generate 1.49 times less return on investment than Hathway Cable. But when comparing it to its historical volatility, AU Small Finance is 1.31 times less risky than Hathway Cable. It trades about 0.01 of its potential returns per unit of risk. Hathway Cable Datacom is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,595  in Hathway Cable Datacom on April 25, 2025 and sell it today you would lose (30.00) from holding Hathway Cable Datacom or give up 1.88% of portfolio value over 90 days.

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

AU Small Finance  vs.  Hathway Cable Datacom

AU Small Finance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AU Small Finance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AU Small may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Hathway Cable Datacom

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hathway Cable Datacom are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Hathway Cable may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with AU Small and Hathway Cable

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

The idea behind AU Small Finance and Hathway Cable Datacom 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.