Correlation Between Hayward Holdings and Chardan NexTech

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

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

Diversification Opportunities for Hayward Holdings and Chardan NexTech

-0.53

Correlation Coefficient

Hayward Holdings  Chardan NexTech

Excellent diversification

The 3 months correlation between Hayward and Chardan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hayward Holdings and Chardan NexTech Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chardan NexTech Acqu and Hayward Holdings 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 Hayward Holdings are associated (or correlated) with Chardan NexTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chardan NexTech Acqu has no effect on the direction of Hayward Holdings i.e., Hayward Holdings and Chardan NexTech go up and down completely randomly.

Pair Corralation between Hayward Holdings and Chardan NexTech

Given the investment horizon of 90 days Hayward Holdings is expected to generate 100.81 times less return on investment than Chardan NexTech. But when comparing it to its historical volatility, Hayward Holdings is 11.92 times less risky than Chardan NexTech. It trades about 0.02 of its potential returns per unit of risk. Chardan NexTech Acquisition is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Chardan NexTech Acquisition on October 23, 2024 and sell it today you would earn a total of  1.39  from holding Chardan NexTech Acquisition or generate 77.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

Hayward Holdings  vs.  Chardan NexTech Acquisition

Hayward Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hayward Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hayward Holdings is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chardan NexTech Acqu

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chardan NexTech Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Chardan NexTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hayward Holdings and Chardan NexTech

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

The idea behind Hayward Holdings and Chardan NexTech Acquisition 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.