Correlation Between Hardide PLC and Coor Service

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

By analyzing existing cross correlation between Hardide PLC and Coor Service Management, you can compare the effects of market volatilities on Hardide PLC and Coor Service 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 Hardide PLC with a short position of Coor Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hardide PLC and Coor Service.

Diversification Opportunities for Hardide PLC and Coor Service

-0.24

Correlation Coefficient

Hardide PLC  Coor Service

Very good diversification

The 3 months correlation between Hardide and Coor is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hardide PLC and Coor Service Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coor Service Management and Hardide PLC 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 Hardide PLC are associated (or correlated) with Coor Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coor Service Management has no effect on the direction of Hardide PLC i.e., Hardide PLC and Coor Service go up and down completely randomly.

Pair Corralation between Hardide PLC and Coor Service

Assuming the 90 days trading horizon Hardide PLC is expected to generate 2.02 times more return on investment than Coor Service. However, Hardide PLC is 2.02 times more volatile than Coor Service Management. It trades about 0.12 of its potential returns per unit of risk. Coor Service Management is currently generating about 0.02 per unit of risk. If you would invest  510.00  in Hardide PLC on November 29, 2024 and sell it today you would earn a total of  165.00  from holding Hardide PLC or generate 32.35% return on investment over 90 days.

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

Hardide PLC  vs.  Coor Service Management

Hardide PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hardide PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Hardide PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Coor Service Management

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coor Service Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Coor Service is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hardide PLC and Coor Service

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

The idea behind Hardide PLC and Coor Service Management 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.