Correlation Between Hyster Yale and CEA Industries

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

By analyzing existing cross correlation between Hyster Yale Materials Handling and CEA Industries, you can compare the effects of market volatilities on Hyster Yale and CEA Industries 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 Hyster Yale with a short position of CEA Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyster Yale and CEA Industries.

Diversification Opportunities for Hyster Yale and CEA Industries

-0.41

Correlation Coefficient

Hyster Yale  CEA Industries

Very good diversification

The 3 months correlation between Hyster and CEA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and CEA Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEA Industries and Hyster Yale 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 Hyster Yale Materials Handling are associated (or correlated) with CEA Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEA Industries has no effect on the direction of Hyster Yale i.e., Hyster Yale and CEA Industries go up and down completely randomly.

Pair Corralation between Hyster Yale and CEA Industries

Allowing for the 90-day total investment horizon Hyster Yale Materials Handling is expected to under-perform the CEA Industries. But the stock apears to be less risky and, when comparing its historical volatility, Hyster Yale Materials Handling is 2.83 times less risky than CEA Industries. The stock trades about -0.34 of its potential returns per unit of risk. The CEA Industries is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  849.00  in CEA Industries on October 12, 2024 and sell it today you would lose (37.00) from holding CEA Industries or give up 4.36% of portfolio value over 90 days.

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

Hyster Yale Materials Handling  vs.  CEA Industries

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CEA Industries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CEA Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, CEA Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hyster Yale and CEA Industries

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

The idea behind Hyster Yale Materials Handling and CEA Industries 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.