Correlation Between First Asset and Hamilton Canadian

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

By analyzing existing cross correlation between First Asset Energy and Hamilton Canadian Financials, you can compare the effects of market volatilities on First Asset and Hamilton Canadian 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 First Asset with a short position of Hamilton Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and Hamilton Canadian.

Diversification Opportunities for First Asset and Hamilton Canadian

0.04

Correlation Coefficient

First Asset  Hamilton Canadian

Significant diversification

The 3 months correlation between First and Hamilton is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Energy and Hamilton Canadian Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Canadian and First Asset 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 First Asset Energy are associated (or correlated) with Hamilton Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Canadian has no effect on the direction of First Asset i.e., First Asset and Hamilton Canadian go up and down completely randomly.

Pair Corralation between First Asset and Hamilton Canadian

Assuming the 90 days trading horizon First Asset is expected to generate 8.54 times less return on investment than Hamilton Canadian. In addition to that, First Asset is 2.65 times more volatile than Hamilton Canadian Financials. It trades about 0.01 of its total potential returns per unit of risk. Hamilton Canadian Financials is currently generating about 0.3 per unit of volatility. If you would invest  1,381  in Hamilton Canadian Financials on September 13, 2024 and sell it today you would earn a total of  112.00  from holding Hamilton Canadian Financials or generate 8.11% return on investment over 90 days.

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

First Asset Energy  vs.  Hamilton Canadian Financials

First Asset Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Asset Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, First Asset is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Hamilton Canadian

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Canadian Financials are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hamilton Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Asset and Hamilton Canadian

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

The idea behind First Asset Energy and Hamilton Canadian Financials 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.