Correlation Between Hanesbrands and Insas Bhd

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

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

Diversification Opportunities for Hanesbrands and Insas Bhd

-0.67

Correlation Coefficient

Hanesbrands  Insas Bhd

Excellent diversification

The 3 months correlation between Hanesbrands and Insas is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Insas Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insas Bhd and Hanesbrands 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 Hanesbrands are associated (or correlated) with Insas Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insas Bhd has no effect on the direction of Hanesbrands i.e., Hanesbrands and Insas Bhd go up and down completely randomly.

Pair Corralation between Hanesbrands and Insas Bhd

Considering the 90-day investment horizon Hanesbrands is expected to generate 1.49 times more return on investment than Insas Bhd. However, Hanesbrands is 1.49 times more volatile than Insas Bhd. It trades about 0.15 of its potential returns per unit of risk. Insas Bhd is currently generating about 0.04 per unit of risk. If you would invest  790.00  in Hanesbrands on September 12, 2024 and sell it today you would earn a total of  51.00  from holding Hanesbrands or generate 6.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.3%
Values	Daily Returns

Hanesbrands  vs.  Insas Bhd

Hanesbrands

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hanesbrands are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental drivers, Hanesbrands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Insas Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hanesbrands and Insas Bhd

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

The idea behind Hanesbrands and Insas Bhd 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.