Correlation Between EX PACK and Hunas Falls

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

By analyzing existing cross correlation between EX PACK RUGATED CARTONS and Hunas Falls Hotels, you can compare the effects of market volatilities on EX PACK and Hunas Falls 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 EX PACK with a short position of Hunas Falls. Check out your portfolio center. Please also check ongoing floating volatility patterns of EX PACK and Hunas Falls.

Diversification Opportunities for EX PACK and Hunas Falls

-0.05

Correlation Coefficient

EX PACK  Hunas Falls

Good diversification

The 3 months correlation between PACKN0000 and Hunas is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding EX PACK RUGATED CARTONS and Hunas Falls Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunas Falls Hotels and EX PACK 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 EX PACK RUGATED CARTONS are associated (or correlated) with Hunas Falls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunas Falls Hotels has no effect on the direction of EX PACK i.e., EX PACK and Hunas Falls go up and down completely randomly.

Pair Corralation between EX PACK and Hunas Falls

Assuming the 90 days trading horizon EX PACK RUGATED CARTONS is expected to generate 0.49 times more return on investment than Hunas Falls. However, EX PACK RUGATED CARTONS is 2.03 times less risky than Hunas Falls. It trades about 0.04 of its potential returns per unit of risk. Hunas Falls Hotels is currently generating about 0.01 per unit of risk. If you would invest  1,300  in EX PACK RUGATED CARTONS on October 7, 2024 and sell it today you would earn a total of  330.00  from holding EX PACK RUGATED CARTONS or generate 25.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.95%
Values	Daily Returns

EX PACK RUGATED CARTONS  vs.  Hunas Falls Hotels

EX PACK RUGATED

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EX PACK RUGATED CARTONS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EX PACK sustained solid returns over the last few months and may actually be approaching a breakup point.

Hunas Falls Hotels

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hunas Falls Hotels are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hunas Falls is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EX PACK and Hunas Falls

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

The idea behind EX PACK RUGATED CARTONS and Hunas Falls Hotels 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.