Correlation Between Maschinenfabrik Berthold and HNI

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

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

Diversification Opportunities for Maschinenfabrik Berthold and HNI

-0.68

Correlation Coefficient

Maschinenfabrik Berthold  HNI

Excellent diversification

The 3 months correlation between Maschinenfabrik and HNI is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Maschinenfabrik Berthold Herml and HNI Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corporation and Maschinenfabrik Berthold 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 Maschinenfabrik Berthold Hermle are associated (or correlated) with HNI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNI Corporation has no effect on the direction of Maschinenfabrik Berthold i.e., Maschinenfabrik Berthold and HNI go up and down completely randomly.

Pair Corralation between Maschinenfabrik Berthold and HNI

Assuming the 90 days trading horizon Maschinenfabrik Berthold Hermle is expected to generate 1.28 times more return on investment than HNI. However, Maschinenfabrik Berthold is 1.28 times more volatile than HNI Corporation. It trades about 0.02 of its potential returns per unit of risk. HNI Corporation is currently generating about -0.18 per unit of risk. If you would invest  16,200  in Maschinenfabrik Berthold Hermle on September 29, 2024 and sell it today you would earn a total of  50.00  from holding Maschinenfabrik Berthold Hermle or generate 0.31% return on investment over 90 days.

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

Maschinenfabrik Berthold Herml  vs.  HNI Corp.

Maschinenfabrik Berthold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maschinenfabrik Berthold Hermle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

HNI Corporation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HNI Corporation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, HNI is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Maschinenfabrik Berthold and HNI

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

The idea behind Maschinenfabrik Berthold Hermle and HNI Corporation 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.