Correlation Between Sanmina and Hillcrest Energy

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

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

Diversification Opportunities for Sanmina and Hillcrest Energy

0.05

Correlation Coefficient

Sanmina  Hillcrest Energy

Significant diversification

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

Pair Corralation between Sanmina and Hillcrest Energy

Given the investment horizon of 90 days Sanmina is expected to generate 13.25 times less return on investment than Hillcrest Energy. But when comparing it to its historical volatility, Sanmina is 3.63 times less risky than Hillcrest Energy. It trades about 0.02 of its potential returns per unit of risk. Hillcrest Energy Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8.20  in Hillcrest Energy Technologies on December 30, 2024 and sell it today you would earn a total of  1.80  from holding Hillcrest Energy Technologies or generate 21.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Sanmina  vs.  Hillcrest Energy Technologies

Sanmina

Risk-Adjusted Performance

Weak

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

Hillcrest Energy Tec

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hillcrest Energy Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Hillcrest Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sanmina and Hillcrest Energy

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

The idea behind Sanmina and Hillcrest Energy 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.