Correlation Between Chemtrade Logistics and Hawkins

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

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

Diversification Opportunities for Chemtrade Logistics and Hawkins

0.86

Correlation Coefficient

Chemtrade Logistics  Hawkins

Very poor diversification

The 3 months correlation between Chemtrade and Hawkins is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Chemtrade Logistics Income and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and Chemtrade Logistics 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 Chemtrade Logistics Income are associated (or correlated) with Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Chemtrade Logistics i.e., Chemtrade Logistics and Hawkins go up and down completely randomly.

Pair Corralation between Chemtrade Logistics and Hawkins

Assuming the 90 days horizon Chemtrade Logistics Income is expected to generate 0.76 times more return on investment than Hawkins. However, Chemtrade Logistics Income is 1.31 times less risky than Hawkins. It trades about -0.07 of its potential returns per unit of risk. Hawkins is currently generating about -0.09 per unit of risk. If you would invest  739.00  in Chemtrade Logistics Income on December 22, 2024 and sell it today you would lose (59.00) from holding Chemtrade Logistics Income or give up 7.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Chemtrade Logistics Income  vs.  Hawkins

Chemtrade Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemtrade Logistics Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hawkins

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hawkins has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Chemtrade Logistics and Hawkins

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

The idea behind Chemtrade Logistics Income and Hawkins 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.