Correlation Between 12511VAA6 and HE Equipment

Can any of the company-specific risk be diversified away by investing in both 12511VAA6 and HE Equipment 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 12511VAA6 and HE Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHDN 575 01 APR 30 and HE Equipment Services, you can compare the effects of market volatilities on 12511VAA6 and HE Equipment 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 12511VAA6 with a short position of HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of 12511VAA6 and HE Equipment.

Diversification Opportunities for 12511VAA6 and HE Equipment

-0.01

Correlation Coefficient

12511VAA6  HE Equipment

Good diversification

The 3 months correlation between 12511VAA6 and HEES is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CHDN 575 01 APR 30 and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services and 12511VAA6 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 CHDN 575 01 APR 30 are associated (or correlated) with HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of 12511VAA6 i.e., 12511VAA6 and HE Equipment go up and down completely randomly.

Pair Corralation between 12511VAA6 and HE Equipment

Assuming the 90 days trading horizon CHDN 575 01 APR 30 is expected to under-perform the HE Equipment. But the bond apears to be less risky and, when comparing its historical volatility, CHDN 575 01 APR 30 is 14.0 times less risky than HE Equipment. The bond trades about -0.12 of its potential returns per unit of risk. The HE Equipment Services is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,905  in HE Equipment Services on December 23, 2024 and sell it today you would earn a total of  4,598  from holding HE Equipment Services or generate 93.74% return on investment over 90 days.

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

CHDN 575 01 APR 30  vs.  HE Equipment Services

CHDN 575 01

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHDN 575 01 APR 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CHDN 575 01 APR 30 investors.

HE Equipment Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HE Equipment Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, HE Equipment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 12511VAA6 and HE Equipment

The main advantage of trading using opposite 12511VAA6 and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 12511VAA6 position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.

The idea behind CHDN 575 01 APR 30 and HE Equipment Services 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.