Correlation Between HEDGE Brasil and Halliburton

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

By analyzing existing cross correlation between HEDGE Brasil Shopping and Halliburton, you can compare the effects of market volatilities on HEDGE Brasil and Halliburton 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 HEDGE Brasil with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEDGE Brasil and Halliburton.

Diversification Opportunities for HEDGE Brasil and Halliburton

-0.59

Correlation Coefficient

HEDGE Brasil  Halliburton

Excellent diversification

The 3 months correlation between HEDGE and Halliburton is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding HEDGE Brasil Shopping and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and HEDGE Brasil 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 HEDGE Brasil Shopping are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of HEDGE Brasil i.e., HEDGE Brasil and Halliburton go up and down completely randomly.

Pair Corralation between HEDGE Brasil and Halliburton

Assuming the 90 days trading horizon HEDGE Brasil Shopping is expected to generate 0.83 times more return on investment than Halliburton. However, HEDGE Brasil Shopping is 1.2 times less risky than Halliburton. It trades about 0.03 of its potential returns per unit of risk. Halliburton is currently generating about 0.0 per unit of risk. If you would invest  15,570  in HEDGE Brasil Shopping on October 4, 2024 and sell it today you would earn a total of  3,235  from holding HEDGE Brasil Shopping or generate 20.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

HEDGE Brasil Shopping  vs.  Halliburton

HEDGE Brasil Shopping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEDGE Brasil Shopping has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong fundamental drivers, HEDGE Brasil is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Halliburton

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Halliburton may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HEDGE Brasil and Halliburton

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

The idea behind HEDGE Brasil Shopping and Halliburton 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.