Correlation Between HYDROFARM HLD and UMWELTBANK

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

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

Diversification Opportunities for HYDROFARM HLD and UMWELTBANK

0.34

Correlation Coefficient

HYDROFARM HLD  UMWELTBANK

Weak diversification

The 3 months correlation between HYDROFARM and UMWELTBANK is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and UMWELTBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMWELTBANK and HYDROFARM HLD 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 HYDROFARM HLD GRP are associated (or correlated) with UMWELTBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMWELTBANK has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and UMWELTBANK go up and down completely randomly.

Pair Corralation between HYDROFARM HLD and UMWELTBANK

Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to under-perform the UMWELTBANK. In addition to that, HYDROFARM HLD is 6.07 times more volatile than UMWELTBANK. It trades about -0.42 of its total potential returns per unit of risk. UMWELTBANK is currently generating about -0.18 per unit of volatility. If you would invest  628.00  in UMWELTBANK on September 28, 2024 and sell it today you would lose (12.00) from holding UMWELTBANK or give up 1.91% of portfolio value over 90 days.

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

HYDROFARM HLD GRP  vs.  UMWELTBANK

HYDROFARM HLD GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HYDROFARM HLD GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HYDROFARM HLD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

UMWELTBANK

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UMWELTBANK are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, UMWELTBANK unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HYDROFARM HLD and UMWELTBANK

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

The idea behind HYDROFARM HLD GRP and UMWELTBANK 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.