Correlation Between Block and Harvest Technology

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

By analyzing existing cross correlation between Block Inc and Harvest Technology Group, you can compare the effects of market volatilities on Block and Harvest Technology 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 Block with a short position of Harvest Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Harvest Technology.

Diversification Opportunities for Block and Harvest Technology

0.76

Correlation Coefficient

Block  Harvest Technology

Poor diversification

The 3 months correlation between Block and Harvest is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Harvest Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Technology and Block 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 Block Inc are associated (or correlated) with Harvest Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Technology has no effect on the direction of Block i.e., Block and Harvest Technology go up and down completely randomly.

Pair Corralation between Block and Harvest Technology

Assuming the 90 days trading horizon Block Inc is expected to generate 0.69 times more return on investment than Harvest Technology. However, Block Inc is 1.45 times less risky than Harvest Technology. It trades about -0.04 of its potential returns per unit of risk. Harvest Technology Group is currently generating about -0.26 per unit of risk. If you would invest  15,169  in Block Inc on October 10, 2024 and sell it today you would lose (403.00) from holding Block Inc or give up 2.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Block Inc  vs.  Harvest Technology Group

Block Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Block unveiled solid returns over the last few months and may actually be approaching a breakup point.

Harvest Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Technology Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Harvest Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Block and Harvest Technology

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

The idea behind Block Inc and Harvest Technology Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.