Correlation Between Hawkins and Perimeter Solutions

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

By analyzing existing cross correlation between Hawkins and Perimeter Solutions SA, you can compare the effects of market volatilities on Hawkins and Perimeter Solutions 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 Perimeter Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawkins and Perimeter Solutions.

Diversification Opportunities for Hawkins and Perimeter Solutions

0.76

Correlation Coefficient

Hawkins  Perimeter Solutions

Poor diversification

The 3 months correlation between Hawkins and Perimeter is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Perimeter Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perimeter Solutions 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 Perimeter Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perimeter Solutions has no effect on the direction of Hawkins i.e., Hawkins and Perimeter Solutions go up and down completely randomly.

Pair Corralation between Hawkins and Perimeter Solutions

Given the investment horizon of 90 days Hawkins is expected to generate 0.79 times more return on investment than Perimeter Solutions. However, Hawkins is 1.27 times less risky than Perimeter Solutions. It trades about -0.09 of its potential returns per unit of risk. Perimeter Solutions SA is currently generating about -0.1 per unit of risk. If you would invest  12,344  in Hawkins on December 30, 2024 and sell it today you would lose (1,730) from holding Hawkins or give up 14.01% of portfolio value over 90 days.

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

Hawkins  vs.  Perimeter Solutions SA

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.

Perimeter Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perimeter Solutions SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators 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.

Pair Trading with Hawkins and Perimeter Solutions

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

The idea behind Hawkins and Perimeter Solutions SA 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.