Correlation Between Hilton Metal and Mrs Bectors

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

By analyzing existing cross correlation between Hilton Metal Forging and Mrs Bectors Food, you can compare the effects of market volatilities on Hilton Metal and Mrs Bectors 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 Hilton Metal with a short position of Mrs Bectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Metal and Mrs Bectors.

Diversification Opportunities for Hilton Metal and Mrs Bectors

-0.13

Correlation Coefficient

Hilton Metal  Mrs Bectors

Good diversification

The 3 months correlation between Hilton and Mrs is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Metal Forging and Mrs Bectors Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mrs Bectors Food and Hilton Metal 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 Hilton Metal Forging are associated (or correlated) with Mrs Bectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mrs Bectors Food has no effect on the direction of Hilton Metal i.e., Hilton Metal and Mrs Bectors go up and down completely randomly.

Pair Corralation between Hilton Metal and Mrs Bectors

Assuming the 90 days trading horizon Hilton Metal is expected to generate 2.78 times less return on investment than Mrs Bectors. In addition to that, Hilton Metal is 1.13 times more volatile than Mrs Bectors Food. It trades about 0.04 of its total potential returns per unit of risk. Mrs Bectors Food is currently generating about 0.11 per unit of volatility. If you would invest  43,298  in Mrs Bectors Food on September 28, 2024 and sell it today you would earn a total of  120,687  from holding Mrs Bectors Food or generate 278.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Hilton Metal Forging  vs.  Mrs Bectors Food

Hilton Metal Forging

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Metal Forging are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Hilton Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Mrs Bectors Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mrs Bectors Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hilton Metal and Mrs Bectors

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

The idea behind Hilton Metal Forging and Mrs Bectors Food 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..