Correlation Between Hello and Applied Opt

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

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

Diversification Opportunities for Hello and Applied Opt

0.72

Correlation Coefficient

Hello  Applied Opt

Poor diversification

The 3 months correlation between Hello and Applied is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Applied Opt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Opt and Hello 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 Hello Group are associated (or correlated) with Applied Opt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Opt has no effect on the direction of Hello i.e., Hello and Applied Opt go up and down completely randomly.

Pair Corralation between Hello and Applied Opt

Given the investment horizon of 90 days Hello Group is expected to generate 0.44 times more return on investment than Applied Opt. However, Hello Group is 2.25 times less risky than Applied Opt. It trades about 0.19 of its potential returns per unit of risk. Applied Opt is currently generating about 0.07 per unit of risk. If you would invest  621.00  in Hello Group on May 18, 2025 and sell it today you would earn a total of  206.00  from holding Hello Group or generate 33.17% return on investment over 90 days.

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

Hello Group  vs.  Applied Opt

Hello Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hello Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Hello displayed solid returns over the last few months and may actually be approaching a breakup point.

Applied Opt

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Opt are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Applied Opt demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hello and Applied Opt

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

The idea behind Hello Group and Applied Opt 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.