Correlation Between Brooge Holdings and Hess Midstream

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

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

Diversification Opportunities for Brooge Holdings and Hess Midstream

-0.46

Correlation Coefficient

Brooge Holdings  Hess Midstream

Very good diversification

The 3 months correlation between Brooge and Hess is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Brooge Holdings and Hess Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess Midstream Partners and Brooge Holdings 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 Brooge Holdings are associated (or correlated) with Hess Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess Midstream Partners has no effect on the direction of Brooge Holdings i.e., Brooge Holdings and Hess Midstream go up and down completely randomly.

Pair Corralation between Brooge Holdings and Hess Midstream

Given the investment horizon of 90 days Brooge Holdings is expected to generate 6.4 times more return on investment than Hess Midstream. However, Brooge Holdings is 6.4 times more volatile than Hess Midstream Partners. It trades about 0.06 of its potential returns per unit of risk. Hess Midstream Partners is currently generating about 0.05 per unit of risk. If you would invest  108.00  in Brooge Holdings on September 3, 2024 and sell it today you would earn a total of  14.00  from holding Brooge Holdings or generate 12.96% return on investment over 90 days.

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

Brooge Holdings  vs.  Hess Midstream Partners

Brooge Holdings

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brooge Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Brooge Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Hess Midstream Partners

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hess Midstream Partners are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hess Midstream is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Brooge Holdings and Hess Midstream

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

The idea behind Brooge Holdings and Hess Midstream Partners 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.