Correlation Between Hiru and Sack Lunch

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

By analyzing existing cross correlation between Hiru Corporation and Sack Lunch Productions, you can compare the effects of market volatilities on Hiru and Sack Lunch 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 Hiru with a short position of Sack Lunch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hiru and Sack Lunch.

Diversification Opportunities for Hiru and Sack Lunch

-0.32

Correlation Coefficient

Hiru  Sack Lunch

Very good diversification

The 3 months correlation between Hiru and Sack is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hiru Corp. and Sack Lunch Productions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sack Lunch Productions and Hiru 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 Hiru Corporation are associated (or correlated) with Sack Lunch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sack Lunch Productions has no effect on the direction of Hiru i.e., Hiru and Sack Lunch go up and down completely randomly.

Pair Corralation between Hiru and Sack Lunch

Given the investment horizon of 90 days Hiru Corporation is expected to generate 1.2 times more return on investment than Sack Lunch. However, Hiru is 1.2 times more volatile than Sack Lunch Productions. It trades about 0.08 of its potential returns per unit of risk. Sack Lunch Productions is currently generating about 0.05 per unit of risk. If you would invest  0.09  in Hiru Corporation on September 14, 2024 and sell it today you would earn a total of  0.03  from holding Hiru Corporation or generate 33.33% return on investment over 90 days.

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

Hiru Corp.  vs.  Sack Lunch Productions

Hiru

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hiru Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sack Lunch Productions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sack Lunch Productions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Hiru and Sack Lunch

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

The idea behind Hiru Corporation and Sack Lunch Productions 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.