Correlation Between Hillenbrand and SBC Medical

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

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

Diversification Opportunities for Hillenbrand and SBC Medical

0.67

Correlation Coefficient

Hillenbrand  SBC Medical

Poor diversification

The 3 months correlation between Hillenbrand and SBC is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand and SBC Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBC Medical Group and Hillenbrand 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 Hillenbrand are associated (or correlated) with SBC Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBC Medical Group has no effect on the direction of Hillenbrand i.e., Hillenbrand and SBC Medical go up and down completely randomly.

Pair Corralation between Hillenbrand and SBC Medical

Allowing for the 90-day total investment horizon Hillenbrand is expected to under-perform the SBC Medical. But the stock apears to be less risky and, when comparing its historical volatility, Hillenbrand is 2.77 times less risky than SBC Medical. The stock trades about -0.11 of its potential returns per unit of risk. The SBC Medical Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  26.00  in SBC Medical Group on September 21, 2024 and sell it today you would earn a total of  1.00  from holding SBC Medical Group or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Hillenbrand  vs.  SBC Medical Group

Hillenbrand

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hillenbrand are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Hillenbrand demonstrated solid returns over the last few months and may actually be approaching a breakup point.

SBC Medical Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBC Medical Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, SBC Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hillenbrand and SBC Medical

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

The idea behind Hillenbrand and SBC Medical Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.