Correlation Between Harvest Bank and First Asset

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

By analyzing existing cross correlation between Harvest Bank Leaders and First Asset Energy, you can compare the effects of market volatilities on Harvest Bank and First Asset 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 Harvest Bank with a short position of First Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Bank and First Asset.

Diversification Opportunities for Harvest Bank and First Asset

0.02

Correlation Coefficient

Harvest Bank  First Asset

Significant diversification

The 3 months correlation between Harvest and First is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Bank Leaders and First Asset Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Energy and Harvest Bank 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 Harvest Bank Leaders are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Energy has no effect on the direction of Harvest Bank i.e., Harvest Bank and First Asset go up and down completely randomly.

Pair Corralation between Harvest Bank and First Asset

Assuming the 90 days trading horizon Harvest Bank Leaders is expected to under-perform the First Asset. In addition to that, Harvest Bank is 1.31 times more volatile than First Asset Energy. It trades about -0.06 of its total potential returns per unit of risk. First Asset Energy is currently generating about 0.14 per unit of volatility. If you would invest  516.00  in First Asset Energy on December 30, 2024 and sell it today you would earn a total of  52.00  from holding First Asset Energy or generate 10.08% return on investment over 90 days.

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

Harvest Bank Leaders  vs.  First Asset Energy

Harvest Bank Leaders

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harvest Bank Leaders has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Harvest Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

First Asset Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Asset Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, First Asset may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Harvest Bank and First Asset

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

The idea behind Harvest Bank Leaders and First Asset Energy 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.