Correlation Between EROAD and Hansen Technologies

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

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

Diversification Opportunities for EROAD and Hansen Technologies

-0.66

Correlation Coefficient

EROAD  Hansen Technologies

Excellent diversification

The 3 months correlation between EROAD and Hansen is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and Hansen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansen Technologies and EROAD 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 EROAD are associated (or correlated) with Hansen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansen Technologies has no effect on the direction of EROAD i.e., EROAD and Hansen Technologies go up and down completely randomly.

Pair Corralation between EROAD and Hansen Technologies

Assuming the 90 days trading horizon EROAD is expected to generate 2.91 times more return on investment than Hansen Technologies. However, EROAD is 2.91 times more volatile than Hansen Technologies. It trades about 0.03 of its potential returns per unit of risk. Hansen Technologies is currently generating about 0.02 per unit of risk. If you would invest  70.00  in EROAD on September 20, 2024 and sell it today you would earn a total of  23.00  from holding EROAD or generate 32.86% return on investment over 90 days.

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

EROAD  vs.  Hansen Technologies

EROAD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EROAD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental 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.

Hansen Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hansen Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hansen Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EROAD and Hansen Technologies

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

The idea behind EROAD and Hansen Technologies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.