Correlation Between Sovereign Metals and Hershey

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

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

Diversification Opportunities for Sovereign Metals and Hershey

0.0

Correlation Coefficient

Sovereign Metals  Hershey

Pay attention - limited upside

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

Pair Corralation between Sovereign Metals and Hershey

If you would invest  3,600  in Sovereign Metals on December 24, 2024 and sell it today you would earn a total of  850.00  from holding Sovereign Metals or generate 23.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Sovereign Metals  vs.  Hershey Co

Sovereign Metals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sovereign Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sovereign Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hershey

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hershey Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hershey is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sovereign Metals and Hershey

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

The idea behind Sovereign Metals and Hershey Co 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.