Correlation Between HE Equipment and LanzaTech Global

Can any of the company-specific risk be diversified away by investing in both HE Equipment and LanzaTech Global 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 LanzaTech Global 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 LanzaTech Global, you can compare the effects of market volatilities on HE Equipment and LanzaTech Global 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 LanzaTech Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and LanzaTech Global.

Diversification Opportunities for HE Equipment and LanzaTech Global

-0.27

Correlation Coefficient

HE Equipment  LanzaTech Global

Very good diversification

The 3 months correlation between HEES and LanzaTech is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and LanzaTech Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LanzaTech Global 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 LanzaTech Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LanzaTech Global has no effect on the direction of HE Equipment i.e., HE Equipment and LanzaTech Global go up and down completely randomly.

Pair Corralation between HE Equipment and LanzaTech Global

Given the investment horizon of 90 days HE Equipment Services is expected to under-perform the LanzaTech Global. But the stock apears to be less risky and, when comparing its historical volatility, HE Equipment Services is 5.3 times less risky than LanzaTech Global. The stock trades about -0.09 of its potential returns per unit of risk. The LanzaTech Global is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8.00  in LanzaTech Global on September 17, 2024 and sell it today you would earn a total of  0.50  from holding LanzaTech Global or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

HE Equipment Services  vs.  LanzaTech Global

HE Equipment Services

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HE Equipment Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, HE Equipment unveiled solid returns over the last few months and may actually be approaching a breakup point.

LanzaTech Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LanzaTech Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with HE Equipment and LanzaTech Global

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

The idea behind HE Equipment Services and LanzaTech Global 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.