Correlation Between KAISER and Hawkins

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

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

Diversification Opportunities for KAISER and Hawkins

-0.11

Correlation Coefficient

KAISER  Hawkins

Good diversification

The 3 months correlation between KAISER and Hawkins is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding KAISER FOUNDATION HOSPITALS and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and KAISER 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 KAISER FOUNDATION HOSPITALS are associated (or correlated) with Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of KAISER i.e., KAISER and Hawkins go up and down completely randomly.

Pair Corralation between KAISER and Hawkins

Assuming the 90 days trading horizon KAISER FOUNDATION HOSPITALS is expected to generate 0.53 times more return on investment than Hawkins. However, KAISER FOUNDATION HOSPITALS is 1.88 times less risky than Hawkins. It trades about 0.05 of its potential returns per unit of risk. Hawkins is currently generating about 0.02 per unit of risk. If you would invest  7,226  in KAISER FOUNDATION HOSPITALS on October 26, 2024 and sell it today you would earn a total of  232.00  from holding KAISER FOUNDATION HOSPITALS or generate 3.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.36%
Values	Daily Returns

KAISER FOUNDATION HOSPITALS  vs.  Hawkins

KAISER FOUNDATION

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KAISER FOUNDATION HOSPITALS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KAISER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hawkins

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Hawkins is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with KAISER and Hawkins

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

The idea behind KAISER FOUNDATION HOSPITALS and Hawkins 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.