Correlation Between Aldel Financial and Hurco Companies

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

By analyzing existing cross correlation between Aldel Financial II and Hurco Companies, you can compare the effects of market volatilities on Aldel Financial and Hurco Companies 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 Aldel Financial with a short position of Hurco Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Hurco Companies.

Diversification Opportunities for Aldel Financial and Hurco Companies

-0.16

Correlation Coefficient

Aldel Financial  Hurco Companies

Good diversification

The 3 months correlation between Aldel and Hurco is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Hurco Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurco Companies and Aldel Financial 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 Aldel Financial II are associated (or correlated) with Hurco Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurco Companies has no effect on the direction of Aldel Financial i.e., Aldel Financial and Hurco Companies go up and down completely randomly.

Pair Corralation between Aldel Financial and Hurco Companies

Assuming the 90 days horizon Aldel Financial is expected to generate 120.91 times less return on investment than Hurco Companies. But when comparing it to its historical volatility, Aldel Financial II is 27.58 times less risky than Hurco Companies. It trades about 0.03 of its potential returns per unit of risk. Hurco Companies is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,810  in Hurco Companies on September 5, 2024 and sell it today you would earn a total of  475.00  from holding Hurco Companies or generate 26.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.62%
Values	Daily Returns

Aldel Financial II  vs.  Hurco Companies

Aldel Financial II

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hurco Companies

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Aldel Financial and Hurco Companies

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

The idea behind Aldel Financial II and Hurco Companies 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.