Correlation Between Hamilton Beach and TPX Old

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

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

Diversification Opportunities for Hamilton Beach and TPX Old

0.81

Correlation Coefficient

Hamilton Beach  TPX Old

Very poor diversification

The 3 months correlation between Hamilton and TPX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Beach Brands and TPX Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPX Old and Hamilton Beach 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 Hamilton Beach Brands are associated (or correlated) with TPX Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPX Old has no effect on the direction of Hamilton Beach i.e., Hamilton Beach and TPX Old go up and down completely randomly.

Pair Corralation between Hamilton Beach and TPX Old

Considering the 90-day investment horizon Hamilton Beach is expected to generate 1.87 times less return on investment than TPX Old. In addition to that, Hamilton Beach is 1.59 times more volatile than TPX Old. It trades about 0.1 of its total potential returns per unit of risk. TPX Old is currently generating about 0.31 per unit of volatility. If you would invest  5,698  in TPX Old on December 28, 2024 and sell it today you would earn a total of  1,180  from holding TPX Old or generate 20.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	54.1%
Values	Daily Returns

Hamilton Beach Brands  vs.  TPX Old

Hamilton Beach Brands

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Beach Brands are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Hamilton Beach sustained solid returns over the last few months and may actually be approaching a breakup point.

TPX Old

Risk-Adjusted Performance

Solid

Over the last 90 days TPX Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, TPX Old showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hamilton Beach and TPX Old

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

The idea behind Hamilton Beach Brands and TPX Old 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.