Correlation Between Hurco Companies and Black Hills

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

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

Diversification Opportunities for Hurco Companies and Black Hills

0.5

Correlation Coefficient

Hurco Companies  Black Hills

Very weak diversification

The 3 months correlation between Hurco and Black is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hurco Companies and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and Hurco Companies 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 Hurco Companies are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Hurco Companies i.e., Hurco Companies and Black Hills go up and down completely randomly.

Pair Corralation between Hurco Companies and Black Hills

Given the investment horizon of 90 days Hurco Companies is expected to generate 1.75 times more return on investment than Black Hills. However, Hurco Companies is 1.75 times more volatile than Black Hills. It trades about 0.24 of its potential returns per unit of risk. Black Hills is currently generating about 0.41 per unit of risk. If you would invest  2,082  in Hurco Companies on September 2, 2024 and sell it today you would earn a total of  250.00  from holding Hurco Companies or generate 12.01% return on investment over 90 days.

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

Hurco Companies  vs.  Black Hills

Hurco Companies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hurco Companies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Hurco Companies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Black Hills

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward-looking signals, Black Hills may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hurco Companies and Black Hills

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

The idea behind Hurco Companies and Black Hills 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.