Correlation Between CBH and IHIT

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

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

Diversification Opportunities for CBH and IHIT

0.0

Correlation Coefficient

CBH  IHIT

Pay attention - limited upside

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

Pair Corralation between CBH and IHIT

If you would invest (100.00) in IHIT on December 26, 2024 and sell it today you would earn a total of  100.00  from holding IHIT or generate -100.0% return on investment over 90 days.

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

CBH  vs.  IHIT

CBH

Risk-Adjusted Performance

Very Weak

Over the last 90 days CBH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, CBH is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

IHIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days IHIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, IHIT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CBH and IHIT

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

The idea behind CBH and IHIT 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.