Correlation Between Clean Science and HB Technology

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

By analyzing existing cross correlation between Clean Science co and HB Technology TD, you can compare the effects of market volatilities on Clean Science and HB Technology 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 Clean Science with a short position of HB Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Science and HB Technology.

Diversification Opportunities for Clean Science and HB Technology

0.66

Correlation Coefficient

Clean Science  HB Technology

Poor diversification

The 3 months correlation between Clean and 078150 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Clean Science co and HB Technology TD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HB Technology TD and Clean Science 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 Clean Science co are associated (or correlated) with HB Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HB Technology TD has no effect on the direction of Clean Science i.e., Clean Science and HB Technology go up and down completely randomly.

Pair Corralation between Clean Science and HB Technology

Assuming the 90 days trading horizon Clean Science is expected to generate 2.1 times less return on investment than HB Technology. But when comparing it to its historical volatility, Clean Science co is 1.79 times less risky than HB Technology. It trades about 0.08 of its potential returns per unit of risk. HB Technology TD is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  193,900  in HB Technology TD on December 25, 2024 and sell it today you would earn a total of  35,100  from holding HB Technology TD or generate 18.1% return on investment over 90 days.

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

Clean Science co  vs.  HB Technology TD

Clean Science co

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Science co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clean Science may actually be approaching a critical reversion point that can send shares even higher in April 2025.

HB Technology TD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HB Technology TD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HB Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clean Science and HB Technology

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

The idea behind Clean Science co and HB Technology TD 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.