Correlation Between Alaska Energy and HLS Therapeutics

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

By analyzing existing cross correlation between Alaska Energy Metals and HLS Therapeutics, you can compare the effects of market volatilities on Alaska Energy and HLS Therapeutics 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 Alaska Energy with a short position of HLS Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Energy and HLS Therapeutics.

Diversification Opportunities for Alaska Energy and HLS Therapeutics

0.01

Correlation Coefficient

Alaska Energy  HLS Therapeutics

Significant diversification

The 3 months correlation between Alaska and HLS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Energy Metals and HLS Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLS Therapeutics and Alaska Energy 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 Alaska Energy Metals are associated (or correlated) with HLS Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLS Therapeutics has no effect on the direction of Alaska Energy i.e., Alaska Energy and HLS Therapeutics go up and down completely randomly.

Pair Corralation between Alaska Energy and HLS Therapeutics

Assuming the 90 days trading horizon Alaska Energy is expected to generate 1.28 times less return on investment than HLS Therapeutics. In addition to that, Alaska Energy is 3.63 times more volatile than HLS Therapeutics. It trades about 0.03 of its total potential returns per unit of risk. HLS Therapeutics is currently generating about 0.15 per unit of volatility. If you would invest  390.00  in HLS Therapeutics on December 28, 2024 and sell it today you would earn a total of  76.00  from holding HLS Therapeutics or generate 19.49% return on investment over 90 days.

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

Alaska Energy Metals  vs.  HLS Therapeutics

Alaska Energy Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Energy Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, Alaska Energy showed solid returns over the last few months and may actually be approaching a breakup point.

HLS Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HLS Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, HLS Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alaska Energy and HLS Therapeutics

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

The idea behind Alaska Energy Metals and HLS Therapeutics 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.