Correlation Between Socket Mobile and Hertz Global

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

By analyzing existing cross correlation between Socket Mobile and Hertz Global Holdings, you can compare the effects of market volatilities on Socket Mobile and Hertz Global 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 Socket Mobile with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Socket Mobile and Hertz Global.

Diversification Opportunities for Socket Mobile and Hertz Global

0.16

Correlation Coefficient

Socket Mobile  Hertz Global

Average diversification

The 3 months correlation between Socket and Hertz is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Socket Mobile and Hertz Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Holdings and Socket Mobile 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 Socket Mobile are associated (or correlated) with Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Holdings has no effect on the direction of Socket Mobile i.e., Socket Mobile and Hertz Global go up and down completely randomly.

Pair Corralation between Socket Mobile and Hertz Global

Given the investment horizon of 90 days Socket Mobile is expected to under-perform the Hertz Global. But the stock apears to be less risky and, when comparing its historical volatility, Socket Mobile is 1.19 times less risky than Hertz Global. The stock trades about -0.04 of its potential returns per unit of risk. The Hertz Global Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  342.00  in Hertz Global Holdings on December 21, 2024 and sell it today you would lose (7.00) from holding Hertz Global Holdings or give up 2.05% of portfolio value over 90 days.

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

Socket Mobile  vs.  Hertz Global Holdings

Socket Mobile

Risk-Adjusted Performance

Very Weak

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

Hertz Global Holdings

Risk-Adjusted Performance

Weak

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

Pair Trading with Socket Mobile and Hertz Global

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

The idea behind Socket Mobile and Hertz Global Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.