Correlation Between BROADWIND ENRGY and H M

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

By analyzing existing cross correlation between BROADWIND ENRGY and H M Hennes, you can compare the effects of market volatilities on BROADWIND ENRGY and H M 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 BROADWIND ENRGY with a short position of H M. Check out your portfolio center. Please also check ongoing floating volatility patterns of BROADWIND ENRGY and H M.

Diversification Opportunities for BROADWIND ENRGY and H M

0.25

Correlation Coefficient

BROADWIND ENRGY  H M

Modest diversification

The 3 months correlation between BROADWIND and HMSB is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding BROADWIND ENRGY and H M Hennes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H M Hennes and BROADWIND ENRGY 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 BROADWIND ENRGY are associated (or correlated) with H M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H M Hennes has no effect on the direction of BROADWIND ENRGY i.e., BROADWIND ENRGY and H M go up and down completely randomly.

Pair Corralation between BROADWIND ENRGY and H M

Assuming the 90 days trading horizon BROADWIND ENRGY is expected to under-perform the H M. In addition to that, BROADWIND ENRGY is 1.53 times more volatile than H M Hennes. It trades about -0.13 of its total potential returns per unit of risk. H M Hennes is currently generating about -0.03 per unit of volatility. If you would invest  1,296  in H M Hennes on December 24, 2024 and sell it today you would lose (60.00) from holding H M Hennes or give up 4.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

BROADWIND ENRGY  vs.  H M Hennes

BROADWIND ENRGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days BROADWIND ENRGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

H M Hennes

Risk-Adjusted Performance

Very Weak

Over the last 90 days H M Hennes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, H M is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BROADWIND ENRGY and H M

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

The idea behind BROADWIND ENRGY and H M Hennes 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.