Correlation Between HE Equipment and Kerry Logistics

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

By analyzing existing cross correlation between HE Equipment Services and Kerry Logistics Network, you can compare the effects of market volatilities on HE Equipment and Kerry Logistics 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 HE Equipment with a short position of Kerry Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Kerry Logistics.

Diversification Opportunities for HE Equipment and Kerry Logistics

0.67

Correlation Coefficient

HE Equipment  Kerry Logistics

Poor diversification

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

Pair Corralation between HE Equipment and Kerry Logistics

Given the investment horizon of 90 days HE Equipment Services is expected to generate 1.38 times more return on investment than Kerry Logistics. However, HE Equipment is 1.38 times more volatile than Kerry Logistics Network. It trades about 0.19 of its potential returns per unit of risk. Kerry Logistics Network is currently generating about 0.12 per unit of risk. If you would invest  4,255  in HE Equipment Services on September 12, 2024 and sell it today you would earn a total of  1,416  from holding HE Equipment Services or generate 33.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

HE Equipment Services  vs.  Kerry Logistics Network

HE Equipment Services

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HE Equipment Services are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, HE Equipment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kerry Logistics Network

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kerry Logistics Network are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Kerry Logistics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HE Equipment and Kerry Logistics

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

The idea behind HE Equipment Services and Kerry Logistics Network 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.