Correlation Between Hillcrest Energy and Benchmark Electronics

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

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

Diversification Opportunities for Hillcrest Energy and Benchmark Electronics

0.01

Correlation Coefficient

Hillcrest Energy  Benchmark Electronics

Significant diversification

The 3 months correlation between Hillcrest and Benchmark is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hillcrest Energy Technologies and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics and Hillcrest Energy 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 Hillcrest Energy Technologies are associated (or correlated) with Benchmark Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Electronics has no effect on the direction of Hillcrest Energy i.e., Hillcrest Energy and Benchmark Electronics go up and down completely randomly.

Pair Corralation between Hillcrest Energy and Benchmark Electronics

Assuming the 90 days horizon Hillcrest Energy Technologies is expected to generate 3.92 times more return on investment than Benchmark Electronics. However, Hillcrest Energy is 3.92 times more volatile than Benchmark Electronics. It trades about 0.08 of its potential returns per unit of risk. Benchmark Electronics is currently generating about -0.12 per unit of risk. If you would invest  8.20  in Hillcrest Energy Technologies on December 30, 2024 and sell it today you would earn a total of  1.80  from holding Hillcrest Energy Technologies or generate 21.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Hillcrest Energy Technologies  vs.  Benchmark Electronics

Hillcrest Energy Tec

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hillcrest Energy Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Hillcrest Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Benchmark Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benchmark Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hillcrest Energy and Benchmark Electronics

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

The idea behind Hillcrest Energy Technologies and Benchmark Electronics 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.