Correlation Between Hanesbrands and Bilfinger

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

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

Diversification Opportunities for Hanesbrands and Bilfinger

-0.67

Correlation Coefficient

Hanesbrands  Bilfinger

Excellent diversification

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

Pair Corralation between Hanesbrands and Bilfinger

Considering the 90-day investment horizon Hanesbrands is expected to generate 1.44 times less return on investment than Bilfinger. In addition to that, Hanesbrands is 1.3 times more volatile than Bilfinger SE ADR. It trades about 0.03 of its total potential returns per unit of risk. Bilfinger SE ADR is currently generating about 0.05 per unit of volatility. If you would invest  778.00  in Bilfinger SE ADR on December 1, 2024 and sell it today you would earn a total of  357.00  from holding Bilfinger SE ADR or generate 45.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	74.9%
Values	Daily Returns

Hanesbrands  vs.  Bilfinger SE ADR

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.

Bilfinger SE ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bilfinger SE ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Bilfinger showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanesbrands and Bilfinger

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

The idea behind Hanesbrands and Bilfinger SE ADR 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.