Correlation Between Hansen Technologies and EROAD

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

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

Diversification Opportunities for Hansen Technologies and EROAD

-0.58

Correlation Coefficient

Hansen Technologies  EROAD

Excellent diversification

The 3 months correlation between Hansen and EROAD is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hansen Technologies and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD and Hansen Technologies 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 Hansen Technologies are associated (or correlated) with EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Hansen Technologies i.e., Hansen Technologies and EROAD go up and down completely randomly.

Pair Corralation between Hansen Technologies and EROAD

Assuming the 90 days trading horizon Hansen Technologies is expected to generate 0.56 times more return on investment than EROAD. However, Hansen Technologies is 1.8 times less risky than EROAD. It trades about 0.13 of its potential returns per unit of risk. EROAD is currently generating about -0.06 per unit of risk. If you would invest  463.00  in Hansen Technologies on September 25, 2024 and sell it today you would earn a total of  71.00  from holding Hansen Technologies or generate 15.33% return on investment over 90 days.

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

Hansen Technologies  vs.  EROAD

Hansen Technologies

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hansen Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hansen Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

EROAD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EROAD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hansen Technologies and EROAD

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

The idea behind Hansen Technologies and EROAD 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.