Correlation Between HB Technology and Settlebank

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

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

Diversification Opportunities for HB Technology and Settlebank

0.76

Correlation Coefficient

HB Technology  Settlebank

Poor diversification

The 3 months correlation between 078150 and Settlebank is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding HB Technology TD and Settlebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Settlebank and HB 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 HB Technology TD are associated (or correlated) with Settlebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Settlebank has no effect on the direction of HB Technology i.e., HB Technology and Settlebank go up and down completely randomly.

Pair Corralation between HB Technology and Settlebank

Assuming the 90 days trading horizon HB Technology TD is expected to under-perform the Settlebank. In addition to that, HB Technology is 1.37 times more volatile than Settlebank. It trades about -0.1 of its total potential returns per unit of risk. Settlebank is currently generating about -0.13 per unit of volatility. If you would invest  1,770,000  in Settlebank on September 4, 2024 and sell it today you would lose (331,000) from holding Settlebank or give up 18.7% of portfolio value over 90 days.

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

HB Technology TD  vs.  Settlebank

HB Technology TD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HB Technology TD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Settlebank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Settlebank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with HB Technology and Settlebank

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

The idea behind HB Technology TD and Settlebank 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.