Correlation Between Escalade Incorporated and HWH International

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

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

Diversification Opportunities for Escalade Incorporated and HWH International

0.09

Correlation Coefficient

Escalade Incorporated  HWH International

Significant diversification

The 3 months correlation between Escalade and HWH is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Escalade Incorporated and HWH International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HWH International and Escalade Incorporated 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 Escalade Incorporated are associated (or correlated) with HWH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HWH International has no effect on the direction of Escalade Incorporated i.e., Escalade Incorporated and HWH International go up and down completely randomly.

Pair Corralation between Escalade Incorporated and HWH International

Given the investment horizon of 90 days Escalade Incorporated is expected to generate 0.39 times more return on investment than HWH International. However, Escalade Incorporated is 2.57 times less risky than HWH International. It trades about 0.02 of its potential returns per unit of risk. HWH International is currently generating about -0.17 per unit of risk. If you would invest  1,458  in Escalade Incorporated on December 3, 2024 and sell it today you would earn a total of  7.00  from holding Escalade Incorporated or generate 0.48% return on investment over 90 days.

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

Escalade Incorporated  vs.  HWH International

Escalade Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Escalade Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Escalade Incorporated is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

HWH International

Risk-Adjusted Performance

Very Weak

Over the last 90 days HWH International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Escalade Incorporated and HWH International

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

The idea behind Escalade Incorporated and HWH International 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.