Correlation Between Hub Cyber and SideChannel

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

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

Diversification Opportunities for Hub Cyber and SideChannel

-0.34

Correlation Coefficient

Hub Cyber  SideChannel

Very good diversification

The 3 months correlation between Hub and SideChannel is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hub Cyber Security and SideChannel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SideChannel and Hub Cyber 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 Hub Cyber Security are associated (or correlated) with SideChannel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SideChannel has no effect on the direction of Hub Cyber i.e., Hub Cyber and SideChannel go up and down completely randomly.

Pair Corralation between Hub Cyber and SideChannel

Given the investment horizon of 90 days Hub Cyber Security is expected to under-perform the SideChannel. But the stock apears to be less risky and, when comparing its historical volatility, Hub Cyber Security is 2.71 times less risky than SideChannel. The stock trades about 0.0 of its potential returns per unit of risk. The SideChannel is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3.20  in SideChannel on September 15, 2024 and sell it today you would earn a total of  0.79  from holding SideChannel or generate 24.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Hub Cyber Security  vs.  SideChannel

Hub Cyber Security

Risk-Adjusted Performance

0 of 100

Very Weak

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

SideChannel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SideChannel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, SideChannel demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hub Cyber and SideChannel

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

The idea behind Hub Cyber Security and SideChannel 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.