Correlation Between Hexcel and Environmmtl Tectonic

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

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

Diversification Opportunities for Hexcel and Environmmtl Tectonic

0.78

Correlation Coefficient

Hexcel  Environmmtl Tectonic

Poor diversification

The 3 months correlation between Hexcel and Environmmtl is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hexcel and Environmmtl Tectonic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Environmmtl Tectonic and Hexcel 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 Hexcel are associated (or correlated) with Environmmtl Tectonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Environmmtl Tectonic has no effect on the direction of Hexcel i.e., Hexcel and Environmmtl Tectonic go up and down completely randomly.

Pair Corralation between Hexcel and Environmmtl Tectonic

Considering the 90-day investment horizon Hexcel is expected to under-perform the Environmmtl Tectonic. But the stock apears to be less risky and, when comparing its historical volatility, Hexcel is 2.6 times less risky than Environmmtl Tectonic. The stock trades about -0.1 of its potential returns per unit of risk. The Environmmtl Tectonic is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  191.00  in Environmmtl Tectonic on December 23, 2024 and sell it today you would lose (1.00) from holding Environmmtl Tectonic or give up 0.52% of portfolio value over 90 days.

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

Hexcel  vs.  Environmmtl Tectonic

Hexcel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hexcel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Environmmtl Tectonic

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Environmmtl Tectonic are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Environmmtl Tectonic is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hexcel and Environmmtl Tectonic

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

The idea behind Hexcel and Environmmtl Tectonic 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.