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Show HN: Find the 10 highest and 10 lowest correlations to any stock

betagainst.fun

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Re: Show HN: Find the 10 highest and 10 lowest correlations to any stock

#12

Post by onlyrealcuzzo »

tdehnel wrote: post #7

I’ve often wondered the same thing, good on you for actually doing it. That said, in any set of 20+ variables there will be a 10 highest/10 lowest correlating. Without a good (specific, hard to vary) explanation as to why the correlation happens, I would not use this information to gamble real money.

It's the 10 highest and lowest SO FAR.

If you track this over time, you will see that these change (often at times when you really want them not to).

Past observances aren't super helpful in predicting fractal futures.

Re: Show HN: Find the 10 highest and 10 lowest correlations to any stock

#16

Post by snake_doc »

In many ways, compared to a vanilla short position or a synthetic short via derivatives, you are implicitly accepting higher risk to “short” via this manner. This is generally a bad idea as it’s hard enough to arbitrage the same equity on different exchanges[1]. Now imagine trying locate perfect negative substitutes for an equity…

[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=525282

Re: Show HN: Find the 10 highest and 10 lowest correlations to any stock

#18

Post by joelthelion »

snake_doc wrote: post #16

In many ways, compared to a vanilla short position or a synthetic short via derivatives, you are implicitly accepting higher risk to “short” via this manner. This is generally a bad idea as it’s hard enough to arbitrage the same equity on different exchanges[1]. Now imagine trying locate perfect negative substitutes for an equity… [1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=525282

I agree that this is very dubious. However, looking at the data sounds fun, if only I could get past the 50x errors :)

Re: Show HN: Find the 10 highest and 10 lowest correlations to any stock

#19

Post by iso1631 »

I can see the risk in short positions - you theoretically could lose an infinite amount (if you borrow X shares of something, sell them, but then can't find any to buy when it comes to returning them), and it's certainly possible to lose more than you put in (sell 100 short at $10 netting you $1000, price doubles overnight on new news, you have to buy $2000, losing a total of $1000 in the process. If price trippled overnight you'd lose $2000 -- more than you could have ever made even if the company went bankrupt overnight)

But put options? Surely all you can do is lose what you bet in the first place?

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