Correlation Between Hammond Power and Propel Holdings

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

By analyzing existing cross correlation between Hammond Power Solutions and Propel Holdings, you can compare the effects of market volatilities on Hammond Power and Propel Holdings 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 Hammond Power with a short position of Propel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hammond Power and Propel Holdings.

Diversification Opportunities for Hammond Power and Propel Holdings

0.46

Correlation Coefficient

Hammond Power  Propel Holdings

Very weak diversification

The 3 months correlation between Hammond and Propel is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hammond Power Solutions and Propel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Propel Holdings and Hammond Power 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 Hammond Power Solutions are associated (or correlated) with Propel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Propel Holdings has no effect on the direction of Hammond Power i.e., Hammond Power and Propel Holdings go up and down completely randomly.

Pair Corralation between Hammond Power and Propel Holdings

Assuming the 90 days trading horizon Hammond Power Solutions is expected to under-perform the Propel Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Hammond Power Solutions is 1.11 times less risky than Propel Holdings. The stock trades about -0.24 of its potential returns per unit of risk. The Propel Holdings is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  3,641  in Propel Holdings on December 2, 2024 and sell it today you would lose (737.00) from holding Propel Holdings or give up 20.24% of portfolio value over 90 days.

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

Hammond Power Solutions  vs.  Propel Holdings

Hammond Power Solutions

Risk-Adjusted Performance

Very Weak

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

Propel Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Propel Holdings 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 essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hammond Power and Propel Holdings

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

The idea behind Hammond Power Solutions and Propel Holdings 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.