Correlation Between Hawkins and Chemtrade Logistics

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

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

Diversification Opportunities for Hawkins and Chemtrade Logistics

0.86

Correlation Coefficient

Hawkins  Chemtrade Logistics

Very poor diversification

The 3 months correlation between Hawkins and Chemtrade is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Chemtrade Logistics Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemtrade Logistics and Hawkins 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 Hawkins are associated (or correlated) with Chemtrade Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemtrade Logistics has no effect on the direction of Hawkins i.e., Hawkins and Chemtrade Logistics go up and down completely randomly.

Pair Corralation between Hawkins and Chemtrade Logistics

Given the investment horizon of 90 days Hawkins is expected to under-perform the Chemtrade Logistics. In addition to that, Hawkins is 1.31 times more volatile than Chemtrade Logistics Income. It trades about -0.09 of its total potential returns per unit of risk. Chemtrade Logistics Income is currently generating about -0.07 per unit of volatility. If you would invest  739.00  in Chemtrade Logistics Income on December 22, 2024 and sell it today you would lose (59.00) from holding Chemtrade Logistics Income or give up 7.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Hawkins  vs.  Chemtrade Logistics Income

Hawkins

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hawkins has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Chemtrade Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemtrade Logistics Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Hawkins and Chemtrade Logistics

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

The idea behind Hawkins and Chemtrade Logistics Income 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.