Correlation Between HALI34 and ConocoPhillips

Can any of the company-specific risk be diversified away by investing in both HALI34 and ConocoPhillips 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 HALI34 and ConocoPhillips into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HALI34 and ConocoPhillips, you can compare the effects of market volatilities on HALI34 and ConocoPhillips 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 HALI34 with a short position of ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of HALI34 and ConocoPhillips.

Diversification Opportunities for HALI34 and ConocoPhillips

0.51

Correlation Coefficient

HALI34  ConocoPhillips

Very weak diversification

The 3 months correlation between HALI34 and ConocoPhillips is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding HALI34 and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and HALI34 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 HALI34 are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of HALI34 i.e., HALI34 and ConocoPhillips go up and down completely randomly.

Pair Corralation between HALI34 and ConocoPhillips

Assuming the 90 days trading horizon HALI34 is expected to generate 1.44 times more return on investment than ConocoPhillips. However, HALI34 is 1.44 times more volatile than ConocoPhillips. It trades about 0.0 of its potential returns per unit of risk. ConocoPhillips is currently generating about -0.01 per unit of risk. If you would invest  16,422  in HALI34 on September 23, 2024 and sell it today you would lose (646.00) from holding HALI34 or give up 3.93% of portfolio value over 90 days.

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

HALI34  vs.  ConocoPhillips

HALI34

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HALI34 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, HALI34 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ConocoPhillips

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with HALI34 and ConocoPhillips

The main advantage of trading using opposite HALI34 and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HALI34 position performs unexpectedly, ConocoPhillips 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 ConocoPhillips will offset losses from the drop in ConocoPhillips' long position.

The idea behind HALI34 and ConocoPhillips 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.