Correlation Between Hooker Furniture and Patterson UTI

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

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

Diversification Opportunities for Hooker Furniture and Patterson UTI

0.57

Correlation Coefficient

Hooker Furniture  Patterson UTI

Very weak diversification

The 3 months correlation between Hooker and Patterson is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Patterson UTI Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson UTI Energy and Hooker Furniture 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 Hooker Furniture are associated (or correlated) with Patterson UTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson UTI Energy has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Patterson UTI go up and down completely randomly.

Pair Corralation between Hooker Furniture and Patterson UTI

Given the investment horizon of 90 days Hooker Furniture is expected to under-perform the Patterson UTI. In addition to that, Hooker Furniture is 1.28 times more volatile than Patterson UTI Energy. It trades about -0.35 of its total potential returns per unit of risk. Patterson UTI Energy is currently generating about -0.12 per unit of volatility. If you would invest  826.00  in Patterson UTI Energy on September 27, 2024 and sell it today you would lose (58.00) from holding Patterson UTI Energy or give up 7.02% of portfolio value over 90 days.

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

Hooker Furniture  vs.  Patterson UTI Energy

Hooker Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hooker Furniture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Patterson UTI Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson UTI Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Patterson UTI is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hooker Furniture and Patterson UTI

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

The idea behind Hooker Furniture and Patterson UTI Energy 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.