Correlation Between HE Equipment and Micromobility

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

Diversification Opportunities for HE Equipment and Micromobility

0.0

Correlation Coefficient

HE Equipment  Micromobility

Pay attention - limited upside

The 3 months correlation between HEES and Micromobility is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Micromobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micromobility 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 Micromobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micromobility has no effect on the direction of HE Equipment i.e., HE Equipment and Micromobility go up and down completely randomly.

Pair Corralation between HE Equipment and Micromobility

Given the investment horizon of 90 days HE Equipment Services is expected to generate 0.41 times more return on investment than Micromobility. However, HE Equipment Services is 2.41 times less risky than Micromobility. It trades about 0.04 of its potential returns per unit of risk. Micromobility is currently generating about -0.01 per unit of risk. If you would invest  4,758  in HE Equipment Services on October 21, 2024 and sell it today you would earn a total of  4,054  from holding HE Equipment Services or generate 85.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	24.4%
Values	Daily Returns

HE Equipment Services  vs.  Micromobility

HE Equipment Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HE Equipment Services are ranked lower than 8 (%) 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.

Micromobility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micromobility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Micromobility is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HE Equipment and Micromobility

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

The idea behind HE Equipment Services and Micromobility 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.