Correlation Between EON SE and Hawaiian Electric

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

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

Diversification Opportunities for EON SE and Hawaiian Electric

0.41

Correlation Coefficient

EON SE  Hawaiian Electric

Very weak diversification

The 3 months correlation between EON and Hawaiian is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding EON SE and Hawaiian Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Electric and EON SE 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 EON SE are associated (or correlated) with Hawaiian Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaiian Electric has no effect on the direction of EON SE i.e., EON SE and Hawaiian Electric go up and down completely randomly.

Pair Corralation between EON SE and Hawaiian Electric

Assuming the 90 days horizon EON SE is expected to under-perform the Hawaiian Electric. In addition to that, EON SE is 1.81 times more volatile than Hawaiian Electric. It trades about -0.09 of its total potential returns per unit of risk. Hawaiian Electric is currently generating about 0.0 per unit of volatility. If you would invest  1,510  in Hawaiian Electric on September 27, 2024 and sell it today you would lose (9.00) from holding Hawaiian Electric or give up 0.6% of portfolio value over 90 days.

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

EON SE  vs.  Hawaiian Electric

EON SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EON SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Hawaiian Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawaiian Electric has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with EON SE and Hawaiian Electric

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

The idea behind EON SE and Hawaiian Electric 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.