Correlation Between Hess Midstream and Brooge Holdings

Can any of the company-specific risk be diversified away by investing in both Hess Midstream and Brooge Holdings 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 Hess Midstream and Brooge Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hess Midstream Partners and Brooge Holdings, you can compare the effects of market volatilities on Hess Midstream and Brooge Holdings 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 Hess Midstream with a short position of Brooge Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hess Midstream and Brooge Holdings.

Diversification Opportunities for Hess Midstream and Brooge Holdings

-0.42

Correlation Coefficient

Hess Midstream  Brooge Holdings

Very good diversification

The 3 months correlation between Hess and Brooge is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hess Midstream Partners and Brooge Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brooge Holdings and Hess Midstream 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 Hess Midstream Partners are associated (or correlated) with Brooge Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brooge Holdings has no effect on the direction of Hess Midstream i.e., Hess Midstream and Brooge Holdings go up and down completely randomly.

Pair Corralation between Hess Midstream and Brooge Holdings

Given the investment horizon of 90 days Hess Midstream Partners is expected to generate 0.24 times more return on investment than Brooge Holdings. However, Hess Midstream Partners is 4.23 times less risky than Brooge Holdings. It trades about 0.18 of its potential returns per unit of risk. Brooge Holdings is currently generating about 0.02 per unit of risk. If you would invest  3,593  in Hess Midstream Partners on December 27, 2024 and sell it today you would earn a total of  644.00  from holding Hess Midstream Partners or generate 17.92% return on investment over 90 days.

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

Hess Midstream Partners  vs.  Brooge Holdings

Hess Midstream Partners

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hess Midstream Partners are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Hess Midstream displayed solid returns over the last few months and may actually be approaching a breakup point.

Brooge Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brooge Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Brooge Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hess Midstream and Brooge Holdings

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

The idea behind Hess Midstream Partners and Brooge Holdings 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.

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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.