Correlation Between Hanesbrands and 3BB INTERNET

Can any of the company-specific risk be diversified away by investing in both Hanesbrands and 3BB INTERNET 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 3BB INTERNET into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hanesbrands and 3BB INTERNET INFRASTRUCTURE, you can compare the effects of market volatilities on Hanesbrands and 3BB INTERNET 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 3BB INTERNET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and 3BB INTERNET.

Diversification Opportunities for Hanesbrands and 3BB INTERNET

-0.37

Correlation Coefficient

Hanesbrands  3BB INTERNET

Very good diversification

The 3 months correlation between Hanesbrands and 3BB is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and 3BB INTERNET INFRASTRUCTURE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3BB INTERNET INFRAST 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 3BB INTERNET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3BB INTERNET INFRAST has no effect on the direction of Hanesbrands i.e., Hanesbrands and 3BB INTERNET go up and down completely randomly.

Pair Corralation between Hanesbrands and 3BB INTERNET

Considering the 90-day investment horizon Hanesbrands is expected to generate 2.61 times more return on investment than 3BB INTERNET. However, Hanesbrands is 2.61 times more volatile than 3BB INTERNET INFRASTRUCTURE. It trades about 0.15 of its potential returns per unit of risk. 3BB INTERNET INFRASTRUCTURE is currently generating about -0.04 per unit of risk. If you would invest  640.00  in Hanesbrands on September 12, 2024 and sell it today you would earn a total of  201.00  from holding Hanesbrands or generate 31.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Hanesbrands  vs.  3BB INTERNET INFRASTRUCTURE

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.

3BB INTERNET INFRAST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 3BB INTERNET INFRASTRUCTURE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, 3BB INTERNET is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hanesbrands and 3BB INTERNET

The main advantage of trading using opposite Hanesbrands and 3BB INTERNET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, 3BB INTERNET 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 3BB INTERNET will offset losses from the drop in 3BB INTERNET's long position.

The idea behind Hanesbrands and 3BB INTERNET INFRASTRUCTURE 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.