Correlation Between HIMARK and Tandy Leather

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

By analyzing existing cross correlation between HIMARK 145 10 MAY 26 and Tandy Leather Factory, you can compare the effects of market volatilities on HIMARK and Tandy Leather 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 HIMARK with a short position of Tandy Leather. Check out your portfolio center. Please also check ongoing floating volatility patterns of HIMARK and Tandy Leather.

Diversification Opportunities for HIMARK and Tandy Leather

0.6

Correlation Coefficient

HIMARK  Tandy Leather

Poor diversification

The 3 months correlation between HIMARK and Tandy is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding HIMARK 145 10 MAY 26 and Tandy Leather Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandy Leather Factory and HIMARK 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 HIMARK 145 10 MAY 26 are associated (or correlated) with Tandy Leather. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandy Leather Factory has no effect on the direction of HIMARK i.e., HIMARK and Tandy Leather go up and down completely randomly.

Pair Corralation between HIMARK and Tandy Leather

Assuming the 90 days trading horizon HIMARK 145 10 MAY 26 is expected to under-perform the Tandy Leather. In addition to that, HIMARK is 1.39 times more volatile than Tandy Leather Factory. It trades about -0.37 of its total potential returns per unit of risk. Tandy Leather Factory is currently generating about -0.32 per unit of volatility. If you would invest  480.00  in Tandy Leather Factory on October 26, 2024 and sell it today you would lose (34.00) from holding Tandy Leather Factory or give up 7.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	31.58%
Values	Daily Returns

HIMARK 145 10 MAY 26  vs.  Tandy Leather Factory

HIMARK 145 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HIMARK 145 10 MAY 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 HIMARK 145 10 MAY 26 investors.

Tandy Leather Factory

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tandy Leather Factory are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Tandy Leather is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HIMARK and Tandy Leather

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

The idea behind HIMARK 145 10 MAY 26 and Tandy Leather Factory 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.