Correlation Between Hanesbrands and Astra Energy

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

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

Diversification Opportunities for Hanesbrands and Astra Energy

0.57

Correlation Coefficient

Hanesbrands  Astra Energy

Very weak diversification

The 3 months correlation between Hanesbrands and Astra is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Astra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Energy 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 Astra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Energy has no effect on the direction of Hanesbrands i.e., Hanesbrands and Astra Energy go up and down completely randomly.

Pair Corralation between Hanesbrands and Astra Energy

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Astra Energy. But the stock apears to be less risky and, when comparing its historical volatility, Hanesbrands is 2.49 times less risky than Astra Energy. The stock trades about -0.15 of its potential returns per unit of risk. The Astra Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7.78  in Astra Energy on December 29, 2024 and sell it today you would earn a total of  0.59  from holding Astra Energy or generate 7.58% return on investment over 90 days.

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

Hanesbrands  vs.  Astra Energy

Hanesbrands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hanesbrands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Astra Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Astra Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Astra Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanesbrands and Astra Energy

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

The idea behind Hanesbrands and Astra 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.