Correlation Between Insteel Industries and Haynes International

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

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

Diversification Opportunities for Insteel Industries and Haynes International

0.0

Correlation Coefficient

Insteel Industries  Haynes International

Pay attention - limited upside

The 3 months correlation between Insteel and Haynes is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Haynes International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haynes International and Insteel Industries 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 Insteel Industries are associated (or correlated) with Haynes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haynes International has no effect on the direction of Insteel Industries i.e., Insteel Industries and Haynes International go up and down completely randomly.

Pair Corralation between Insteel Industries and Haynes International

If you would invest  2,677  in Insteel Industries on December 29, 2024 and sell it today you would earn a total of  82.00  from holding Insteel Industries or generate 3.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Insteel Industries  vs.  Haynes International

Insteel Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Insteel Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Insteel Industries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Haynes International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Haynes International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Haynes International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Insteel Industries and Haynes International

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

The idea behind Insteel Industries and Haynes International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.