Correlation Between Heritage Crystal and Perma Fix

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

By analyzing existing cross correlation between Heritage Crystal Clean and Perma Fix Environmental Svcs, you can compare the effects of market volatilities on Heritage Crystal and Perma Fix 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 Heritage Crystal with a short position of Perma Fix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Crystal and Perma Fix.

Diversification Opportunities for Heritage Crystal and Perma Fix

-0.46

Correlation Coefficient

Heritage Crystal  Perma Fix

Very good diversification

The 3 months correlation between Heritage and Perma is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Crystal Clean and Perma Fix Environmental Svcs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental and Heritage Crystal 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 Heritage Crystal Clean are associated (or correlated) with Perma Fix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of Heritage Crystal i.e., Heritage Crystal and Perma Fix go up and down completely randomly.

Pair Corralation between Heritage Crystal and Perma Fix

Given the investment horizon of 90 days Heritage Crystal is expected to generate 1.12 times less return on investment than Perma Fix. But when comparing it to its historical volatility, Heritage Crystal Clean is 2.04 times less risky than Perma Fix. It trades about 0.13 of its potential returns per unit of risk. Perma Fix Environmental Svcs is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  366.00  in Perma Fix Environmental Svcs on September 21, 2024 and sell it today you would earn a total of  688.00  from holding Perma Fix Environmental Svcs or generate 187.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.28%
Values	Daily Returns

Heritage Crystal Clean  vs.  Perma Fix Environmental Svcs

Heritage Crystal Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heritage Crystal Clean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Heritage Crystal is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Perma Fix Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perma Fix Environmental Svcs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Perma Fix is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Heritage Crystal and Perma Fix

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

The idea behind Heritage Crystal Clean and Perma Fix Environmental Svcs 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.