Correlation Between HE Equipment and 49326EEL3

Can any of the company-specific risk be diversified away by investing in both HE Equipment and 49326EEL3 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 49326EEL3 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 US49326EEL39, you can compare the effects of market volatilities on HE Equipment and 49326EEL3 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 49326EEL3. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and 49326EEL3.

Diversification Opportunities for HE Equipment and 49326EEL3

0.29

Correlation Coefficient

HE Equipment  49326EEL3

Modest diversification

The 3 months correlation between HEES and 49326EEL3 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and US49326EEL39 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US49326EEL39 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 49326EEL3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US49326EEL39 has no effect on the direction of HE Equipment i.e., HE Equipment and 49326EEL3 go up and down completely randomly.

Pair Corralation between HE Equipment and 49326EEL3

Given the investment horizon of 90 days HE Equipment Services is expected to under-perform the 49326EEL3. In addition to that, HE Equipment is 7.24 times more volatile than US49326EEL39. It trades about -0.48 of its total potential returns per unit of risk. US49326EEL39 is currently generating about -0.27 per unit of volatility. If you would invest  10,019  in US49326EEL39 on October 6, 2024 and sell it today you would lose (120.00) from holding US49326EEL39 or give up 1.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.0%
Values	Daily Returns

HE Equipment Services  vs.  US49326EEL39

HE Equipment Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HE Equipment Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, HE Equipment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

US49326EEL39

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US49326EEL39 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 49326EEL3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HE Equipment and 49326EEL3

The main advantage of trading using opposite HE Equipment and 49326EEL3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment position performs unexpectedly, 49326EEL3 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 49326EEL3 will offset losses from the drop in 49326EEL3's long position.

The idea behind HE Equipment Services and US49326EEL39 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.