Correlation Between Flex and Hub Cyber

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

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

Diversification Opportunities for Flex and Hub Cyber

0.09

Correlation Coefficient

Flex  Hub Cyber

Significant diversification

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

Pair Corralation between Flex and Hub Cyber

Given the investment horizon of 90 days Flex is expected to under-perform the Hub Cyber. But the stock apears to be less risky and, when comparing its historical volatility, Flex is 13.65 times less risky than Hub Cyber. The stock trades about -0.03 of its potential returns per unit of risk. The Hub Cyber Security is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1.05  in Hub Cyber Security on December 18, 2024 and sell it today you would earn a total of  1.55  from holding Hub Cyber Security or generate 147.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Flex  vs.  Hub Cyber Security

Flex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Flex is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Hub Cyber Security

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hub Cyber Security are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Hub Cyber showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flex and Hub Cyber

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

The idea behind Flex and Hub Cyber Security 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.