Correlation Between HF SINCLAIR and HEMISPHERE EGY

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

By analyzing existing cross correlation between HF SINCLAIR P and HEMISPHERE EGY, you can compare the effects of market volatilities on HF SINCLAIR and HEMISPHERE EGY 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 HF SINCLAIR with a short position of HEMISPHERE EGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF SINCLAIR and HEMISPHERE EGY.

Diversification Opportunities for HF SINCLAIR and HEMISPHERE EGY

0.79

Correlation Coefficient

HF SINCLAIR  HEMISPHERE EGY

Poor diversification

The 3 months correlation between HL80 and HEMISPHERE is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding HF SINCLAIR P and HEMISPHERE EGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEMISPHERE EGY and HF SINCLAIR 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 HF SINCLAIR P are associated (or correlated) with HEMISPHERE EGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEMISPHERE EGY has no effect on the direction of HF SINCLAIR i.e., HF SINCLAIR and HEMISPHERE EGY go up and down completely randomly.

Pair Corralation between HF SINCLAIR and HEMISPHERE EGY

Assuming the 90 days trading horizon HF SINCLAIR P is expected to under-perform the HEMISPHERE EGY. In addition to that, HF SINCLAIR is 1.88 times more volatile than HEMISPHERE EGY. It trades about -0.02 of its total potential returns per unit of risk. HEMISPHERE EGY is currently generating about 0.02 per unit of volatility. If you would invest  118.00  in HEMISPHERE EGY on December 30, 2024 and sell it today you would earn a total of  1.00  from holding HEMISPHERE EGY or generate 0.85% return on investment over 90 days.

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

HF SINCLAIR P  vs.  HEMISPHERE EGY

HF SINCLAIR P

Risk-Adjusted Performance

Very Weak

Over the last 90 days HF SINCLAIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HF SINCLAIR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

HEMISPHERE EGY

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HEMISPHERE EGY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, HEMISPHERE EGY is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HF SINCLAIR and HEMISPHERE EGY

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

The idea behind HF SINCLAIR P and HEMISPHERE EGY 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.