Correlation Between Humasis and HLB Power

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

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

Diversification Opportunities for Humasis and HLB Power

0.73

Correlation Coefficient

Humasis  HLB Power

Poor diversification

The 3 months correlation between Humasis and HLB is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Humasis Co and HLB Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLB Power and Humasis 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 Humasis Co are associated (or correlated) with HLB Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLB Power has no effect on the direction of Humasis i.e., Humasis and HLB Power go up and down completely randomly.

Pair Corralation between Humasis and HLB Power

Assuming the 90 days trading horizon Humasis Co is expected to generate 0.41 times more return on investment than HLB Power. However, Humasis Co is 2.44 times less risky than HLB Power. It trades about -0.09 of its potential returns per unit of risk. HLB Power Co is currently generating about -0.08 per unit of risk. If you would invest  173,400  in Humasis Co on December 31, 2024 and sell it today you would lose (26,700) from holding Humasis Co or give up 15.4% of portfolio value over 90 days.

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

Humasis Co  vs.  HLB Power Co

Humasis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humasis Co 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 May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HLB Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days HLB Power Co 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 May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Humasis and HLB Power

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

The idea behind Humasis Co and HLB Power Co 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.