Correlation Between LS Starrett and Hillman Solutions

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

By analyzing existing cross correlation between LS Starrett and Hillman Solutions Corp, you can compare the effects of market volatilities on LS Starrett and Hillman Solutions 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 LS Starrett with a short position of Hillman Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS Starrett and Hillman Solutions.

Diversification Opportunities for LS Starrett and Hillman Solutions

0.0

Correlation Coefficient

LS Starrett  Hillman Solutions

Pay attention - limited upside

The 3 months correlation between SCX and Hillman is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LS Starrett and Hillman Solutions Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillman Solutions Corp and LS Starrett 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 LS Starrett are associated (or correlated) with Hillman Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillman Solutions Corp has no effect on the direction of LS Starrett i.e., LS Starrett and Hillman Solutions go up and down completely randomly.

Pair Corralation between LS Starrett and Hillman Solutions

If you would invest (100.00) in LS Starrett on November 28, 2024 and sell it today you would earn a total of  100.00  from holding LS Starrett or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

LS Starrett  vs.  Hillman Solutions Corp

LS Starrett

Risk-Adjusted Performance

Very Weak

Over the last 90 days LS Starrett has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, LS Starrett is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hillman Solutions Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hillman Solutions Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with LS Starrett and Hillman Solutions

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

The idea behind LS Starrett and Hillman Solutions Corp 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.