Correlation Between Hanesbrands and BIO UV

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

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

Diversification Opportunities for Hanesbrands and BIO UV

-0.8

Correlation Coefficient

Hanesbrands  BIO UV

Pay attention - limited upside

The 3 months correlation between Hanesbrands and BIO is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and BIO UV Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO UV Group 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 BIO UV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO UV Group has no effect on the direction of Hanesbrands i.e., Hanesbrands and BIO UV go up and down completely randomly.

Pair Corralation between Hanesbrands and BIO UV

Considering the 90-day investment horizon Hanesbrands is expected to generate 1.52 times more return on investment than BIO UV. However, Hanesbrands is 1.52 times more volatile than BIO UV Group. It trades about 0.26 of its potential returns per unit of risk. BIO UV Group is currently generating about -0.17 per unit of risk. If you would invest  712.00  in Hanesbrands on September 4, 2024 and sell it today you would earn a total of  179.00  from holding Hanesbrands or generate 25.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Hanesbrands  vs.  BIO UV Group

Hanesbrands

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hanesbrands are ranked lower than 13 (%) 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.

BIO UV Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BIO UV Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Hanesbrands and BIO UV

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

The idea behind Hanesbrands and BIO UV Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.