Correlation Between Equity Development and Hoffmen Cleanindo

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

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

Diversification Opportunities for Equity Development and Hoffmen Cleanindo

-0.13

Correlation Coefficient

Equity Development  Hoffmen Cleanindo

Good diversification

The 3 months correlation between Equity and Hoffmen is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Equity Development Investment and Hoffmen Cleanindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoffmen Cleanindo and Equity Development 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 Equity Development Investment are associated (or correlated) with Hoffmen Cleanindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoffmen Cleanindo has no effect on the direction of Equity Development i.e., Equity Development and Hoffmen Cleanindo go up and down completely randomly.

Pair Corralation between Equity Development and Hoffmen Cleanindo

Assuming the 90 days trading horizon Equity Development Investment is expected to under-perform the Hoffmen Cleanindo. But the stock apears to be less risky and, when comparing its historical volatility, Equity Development Investment is 2.0 times less risky than Hoffmen Cleanindo. The stock trades about -0.31 of its potential returns per unit of risk. The Hoffmen Cleanindo is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest  14,800  in Hoffmen Cleanindo on October 20, 2024 and sell it today you would earn a total of  4,300  from holding Hoffmen Cleanindo or generate 29.05% return on investment over 90 days.

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

Equity Development Investment  vs.  Hoffmen Cleanindo

Equity Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equity Development Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Hoffmen Cleanindo

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hoffmen Cleanindo are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Hoffmen Cleanindo may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Equity Development and Hoffmen Cleanindo

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

The idea behind Equity Development Investment and Hoffmen Cleanindo 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.