Correlation Between ALLSTATE and Hurco Companies

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

By analyzing existing cross correlation between ALLSTATE P 535 and Hurco Companies, you can compare the effects of market volatilities on ALLSTATE and Hurco Companies 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 ALLSTATE with a short position of Hurco Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLSTATE and Hurco Companies.

Diversification Opportunities for ALLSTATE and Hurco Companies

0.18

Correlation Coefficient

ALLSTATE  Hurco Companies

Average diversification

The 3 months correlation between ALLSTATE and Hurco is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ALLSTATE P 535 and Hurco Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurco Companies and ALLSTATE 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 ALLSTATE P 535 are associated (or correlated) with Hurco Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurco Companies has no effect on the direction of ALLSTATE i.e., ALLSTATE and Hurco Companies go up and down completely randomly.

Pair Corralation between ALLSTATE and Hurco Companies

Assuming the 90 days trading horizon ALLSTATE P 535 is expected to generate 0.36 times more return on investment than Hurco Companies. However, ALLSTATE P 535 is 2.76 times less risky than Hurco Companies. It trades about -0.04 of its potential returns per unit of risk. Hurco Companies is currently generating about -0.05 per unit of risk. If you would invest  10,276  in ALLSTATE P 535 on October 10, 2024 and sell it today you would lose (164.00) from holding ALLSTATE P 535 or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	80.65%
Values	Daily Returns

ALLSTATE P 535  vs.  Hurco Companies

ALLSTATE P 535

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLSTATE P 535 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLSTATE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hurco Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hurco Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Hurco Companies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ALLSTATE and Hurco Companies

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

The idea behind ALLSTATE P 535 and Hurco Companies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.