Correlation Between Habco Trans and Lima Dua

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

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

Diversification Opportunities for Habco Trans and Lima Dua

0.42

Correlation Coefficient

Habco Trans  Lima Dua

Very weak diversification

The 3 months correlation between Habco and Lima is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Habco Trans Maritima and Lima Dua Lima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lima Dua Lima and Habco Trans 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 Habco Trans Maritima are associated (or correlated) with Lima Dua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lima Dua Lima has no effect on the direction of Habco Trans i.e., Habco Trans and Lima Dua go up and down completely randomly.

Pair Corralation between Habco Trans and Lima Dua

Assuming the 90 days trading horizon Habco Trans Maritima is expected to generate 0.58 times more return on investment than Lima Dua. However, Habco Trans Maritima is 1.72 times less risky than Lima Dua. It trades about -0.04 of its potential returns per unit of risk. Lima Dua Lima is currently generating about -0.08 per unit of risk. If you would invest  28,400  in Habco Trans Maritima on December 29, 2024 and sell it today you would lose (2,200) from holding Habco Trans Maritima or give up 7.75% of portfolio value over 90 days.

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

Habco Trans Maritima  vs.  Lima Dua Lima

Habco Trans Maritima

Risk-Adjusted Performance

Very Weak

Over the last 90 days Habco Trans Maritima has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Habco Trans is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Lima Dua Lima

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lima Dua Lima has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Habco Trans and Lima Dua

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

The idea behind Habco Trans Maritima and Lima Dua Lima 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.