Correlation Between Helios Technologies and Power Solutions

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

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

Diversification Opportunities for Helios Technologies and Power Solutions

-0.65

Correlation Coefficient

Helios Technologies  Power Solutions

Excellent diversification

The 3 months correlation between Helios and Power is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Helios Technologies and Power Solutions International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Solutions Inte 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 Power Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Solutions Inte has no effect on the direction of Helios Technologies i.e., Helios Technologies and Power Solutions go up and down completely randomly.

Pair Corralation between Helios Technologies and Power Solutions

If you would invest  315.00  in Power Solutions International on September 30, 2024 and sell it today you would earn a total of  0.00  from holding Power Solutions International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.79%
Values	Daily Returns

Helios Technologies  vs.  Power Solutions International

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.

Power Solutions Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Solutions International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Power Solutions is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Helios Technologies and Power Solutions

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

The idea behind Helios Technologies and Power Solutions International 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.