Correlation Between Signet International and Hiru

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

By analyzing existing cross correlation between Signet International Holdings and Hiru Corporation, you can compare the effects of market volatilities on Signet International and Hiru 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 Signet International with a short position of Hiru. Check out your portfolio center. Please also check ongoing floating volatility patterns of Signet International and Hiru.

Diversification Opportunities for Signet International and Hiru

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Correlation Coefficient

Signet International  Hiru

Pay attention - limited upside

The 3 months correlation between Signet and Hiru is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Signet International Holdings and Hiru Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiru and Signet International 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 Signet International Holdings are associated (or correlated) with Hiru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiru has no effect on the direction of Signet International i.e., Signet International and Hiru go up and down completely randomly.

Pair Corralation between Signet International and Hiru

Given the investment horizon of 90 days Signet International Holdings is expected to generate 2.83 times more return on investment than Hiru. However, Signet International is 2.83 times more volatile than Hiru Corporation. It trades about 0.08 of its potential returns per unit of risk. Hiru Corporation is currently generating about 0.06 per unit of risk. If you would invest  28.00  in Signet International Holdings on September 5, 2024 and sell it today you would lose (1.00) from holding Signet International Holdings or give up 3.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Signet International Holdings  vs.  Hiru Corp.

Signet International

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Signet International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Signet International is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hiru

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Signet International and Hiru

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

The idea behind Signet International Holdings and Hiru Corporation 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.