Correlation Between Halma Plc and Brookfield Business

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

By analyzing existing cross correlation between Halma plc and Brookfield Business Partners, you can compare the effects of market volatilities on Halma Plc and Brookfield Business 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 Halma Plc with a short position of Brookfield Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halma Plc and Brookfield Business.

Diversification Opportunities for Halma Plc and Brookfield Business

0.07

Correlation Coefficient

Halma Plc  Brookfield Business

Significant diversification

The 3 months correlation between Halma and Brookfield is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Halma plc and Brookfield Business Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business and Halma Plc 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 Halma plc are associated (or correlated) with Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business has no effect on the direction of Halma Plc i.e., Halma Plc and Brookfield Business go up and down completely randomly.

Pair Corralation between Halma Plc and Brookfield Business

Assuming the 90 days horizon Halma plc is expected to generate 0.93 times more return on investment than Brookfield Business. However, Halma plc is 1.08 times less risky than Brookfield Business. It trades about 0.09 of its potential returns per unit of risk. Brookfield Business Partners is currently generating about -0.08 per unit of risk. If you would invest  3,354  in Halma plc on October 24, 2024 and sell it today you would earn a total of  120.00  from holding Halma plc or generate 3.58% return on investment over 90 days.

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

Halma plc  vs.  Brookfield Business Partners

Halma plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Halma plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Halma Plc may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Brookfield Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookfield Business Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Brookfield Business 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 Halma Plc and Brookfield Business

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

The idea behind Halma plc and Brookfield Business Partners 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.