Correlation Between Hooker Furniture and Novelis

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

By analyzing existing cross correlation between Hooker Furniture and Novelis Corp 475, you can compare the effects of market volatilities on Hooker Furniture and Novelis 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 Novelis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Novelis.

Diversification Opportunities for Hooker Furniture and Novelis

0.78

Correlation Coefficient

Hooker Furniture  Novelis

Poor diversification

The 3 months correlation between Hooker and Novelis is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Novelis Corp 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novelis Corp 475 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 Novelis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novelis Corp 475 has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Novelis go up and down completely randomly.

Pair Corralation between Hooker Furniture and Novelis

Given the investment horizon of 90 days Hooker Furniture is expected to under-perform the Novelis. In addition to that, Hooker Furniture is 5.27 times more volatile than Novelis Corp 475. It trades about -0.12 of its total potential returns per unit of risk. Novelis Corp 475 is currently generating about 0.16 per unit of volatility. If you would invest  9,238  in Novelis Corp 475 on October 24, 2024 and sell it today you would earn a total of  109.00  from holding Novelis Corp 475 or generate 1.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Hooker Furniture  vs.  Novelis Corp 475

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Novelis Corp 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novelis Corp 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Novelis is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hooker Furniture and Novelis

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

The idea behind Hooker Furniture and Novelis Corp 475 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.