Correlation Between Hanesbrands and United Lithium

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

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

Diversification Opportunities for Hanesbrands and United Lithium

0.52

Correlation Coefficient

Hanesbrands  United Lithium

Very weak diversification

The 3 months correlation between Hanesbrands and United is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and United Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Lithium Corp 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 United Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Lithium Corp has no effect on the direction of Hanesbrands i.e., Hanesbrands and United Lithium go up and down completely randomly.

Pair Corralation between Hanesbrands and United Lithium

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the United Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Hanesbrands is 3.06 times less risky than United Lithium. The stock trades about -0.18 of its potential returns per unit of risk. The United Lithium Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  13.00  in United Lithium Corp on December 2, 2024 and sell it today you would lose (3.00) from holding United Lithium Corp or give up 23.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Hanesbrands  vs.  United Lithium Corp

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.

United Lithium Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, United Lithium is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hanesbrands and United Lithium

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

The idea behind Hanesbrands and United Lithium Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.