Correlation Between Mayfield Childcare and Hansen Technologies

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

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

Diversification Opportunities for Mayfield Childcare and Hansen Technologies

0.02

Correlation Coefficient

Mayfield Childcare  Hansen Technologies

Significant diversification

The 3 months correlation between Mayfield and Hansen is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mayfield Childcare and Hansen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansen Technologies and Mayfield Childcare 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 Mayfield Childcare are associated (or correlated) with Hansen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansen Technologies has no effect on the direction of Mayfield Childcare i.e., Mayfield Childcare and Hansen Technologies go up and down completely randomly.

Pair Corralation between Mayfield Childcare and Hansen Technologies

Assuming the 90 days trading horizon Mayfield Childcare is expected to under-perform the Hansen Technologies. In addition to that, Mayfield Childcare is 5.4 times more volatile than Hansen Technologies. It trades about -0.05 of its total potential returns per unit of risk. Hansen Technologies is currently generating about -0.14 per unit of volatility. If you would invest  534.00  in Hansen Technologies on October 22, 2024 and sell it today you would lose (16.00) from holding Hansen Technologies or give up 3.0% of portfolio value over 90 days.

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

Mayfield Childcare  vs.  Hansen Technologies

Mayfield Childcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mayfield Childcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Hansen Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hansen Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hansen Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mayfield Childcare and Hansen Technologies

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

The idea behind Mayfield Childcare and Hansen Technologies 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.