Correlation Between HTBI Old and German American

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

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

Diversification Opportunities for HTBI Old and German American

-0.43

Correlation Coefficient

HTBI Old  German American

Very good diversification

The 3 months correlation between HTBI and German is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding HTBI Old and German American Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on German American Bancorp and HTBI Old 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 HTBI Old are associated (or correlated) with German American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of German American Bancorp has no effect on the direction of HTBI Old i.e., HTBI Old and German American go up and down completely randomly.

Pair Corralation between HTBI Old and German American

Given the investment horizon of 90 days HTBI Old is expected to generate 1.2 times more return on investment than German American. However, HTBI Old is 1.2 times more volatile than German American Bancorp. It trades about 0.14 of its potential returns per unit of risk. German American Bancorp is currently generating about -0.07 per unit of risk. If you would invest  3,372  in HTBI Old on December 29, 2024 and sell it today you would earn a total of  283.00  from holding HTBI Old or generate 8.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	60.66%
Values	Daily Returns

HTBI Old  vs.  German American Bancorp

HTBI Old

Risk-Adjusted Performance

OK

Over the last 90 days HTBI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak fundamental drivers, HTBI Old demonstrated solid returns over the last few months and may actually be approaching a breakup point.

German American Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days German American Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, German American is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HTBI Old and German American

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

The idea behind HTBI Old and German American Bancorp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.