Correlation Between Helios Technologies and Hillenbrand

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

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

Diversification Opportunities for Helios Technologies and Hillenbrand

0.63

Correlation Coefficient

Helios Technologies  Hillenbrand

Poor diversification

The 3 months correlation between Helios and Hillenbrand is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Helios Technologies and Hillenbrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillenbrand and Helios Technologies 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 Helios Technologies are associated (or correlated) with Hillenbrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillenbrand has no effect on the direction of Helios Technologies i.e., Helios Technologies and Hillenbrand go up and down completely randomly.

Pair Corralation between Helios Technologies and Hillenbrand

Given the investment horizon of 90 days Helios Technologies is expected to under-perform the Hillenbrand. In addition to that, Helios Technologies is 1.02 times more volatile than Hillenbrand. It trades about -0.49 of its total potential returns per unit of risk. Hillenbrand is currently generating about -0.17 per unit of volatility. If you would invest  3,272  in Hillenbrand on October 6, 2024 and sell it today you would lose (187.00) from holding Hillenbrand or give up 5.72% of portfolio value over 90 days.

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

Helios Technologies  vs.  Hillenbrand

Helios Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Helios Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Helios Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Hillenbrand

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hillenbrand are ranked lower than 7 (%) 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.

Pair Trading with Helios Technologies and Hillenbrand

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

The idea behind Helios Technologies and Hillenbrand 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.