Correlation Between HeartCore Enterprises and Fernhill Corp

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

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

Diversification Opportunities for HeartCore Enterprises and Fernhill Corp

0.68

Correlation Coefficient

HeartCore Enterprises  Fernhill Corp

Poor diversification

The 3 months correlation between HeartCore and Fernhill is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding HeartCore Enterprises and Fernhill Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fernhill Corp and HeartCore Enterprises 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 HeartCore Enterprises are associated (or correlated) with Fernhill Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fernhill Corp has no effect on the direction of HeartCore Enterprises i.e., HeartCore Enterprises and Fernhill Corp go up and down completely randomly.

Pair Corralation between HeartCore Enterprises and Fernhill Corp

Given the investment horizon of 90 days HeartCore Enterprises is expected to under-perform the Fernhill Corp. But the stock apears to be less risky and, when comparing its historical volatility, HeartCore Enterprises is 1.41 times less risky than Fernhill Corp. The stock trades about -0.01 of its potential returns per unit of risk. The Fernhill Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.07  in Fernhill Corp on December 23, 2024 and sell it today you would lose (0.03) from holding Fernhill Corp or give up 42.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

HeartCore Enterprises  vs.  Fernhill Corp

HeartCore Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days HeartCore Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, HeartCore Enterprises is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Fernhill Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fernhill Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Fernhill Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HeartCore Enterprises and Fernhill Corp

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

The idea behind HeartCore Enterprises and Fernhill Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.