Correlation Between Harvest Brand and First Asset

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

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

Diversification Opportunities for Harvest Brand and First Asset

0.16

Correlation Coefficient

Harvest Brand  First Asset

Average diversification

The 3 months correlation between Harvest and First is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Brand Leaders and First Asset Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Energy and Harvest Brand 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 Harvest Brand Leaders are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Energy has no effect on the direction of Harvest Brand i.e., Harvest Brand and First Asset go up and down completely randomly.

Pair Corralation between Harvest Brand and First Asset

Assuming the 90 days trading horizon Harvest Brand Leaders is expected to generate 0.49 times more return on investment than First Asset. However, Harvest Brand Leaders is 2.05 times less risky than First Asset. It trades about 0.1 of its potential returns per unit of risk. First Asset Energy is currently generating about 0.02 per unit of risk. If you would invest  909.00  in Harvest Brand Leaders on September 5, 2024 and sell it today you would earn a total of  274.00  from holding Harvest Brand Leaders or generate 30.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Harvest Brand Leaders  vs.  First Asset Energy

Harvest Brand Leaders

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Brand Leaders are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Harvest Brand may actually be approaching a critical reversion point that can send shares even higher in January 2025.

First Asset Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Asset Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, First Asset is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Harvest Brand and First Asset

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

The idea behind Harvest Brand Leaders and First Asset Energy 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 Transaction History module to view history of all your transactions and understand their impact on performance.