Correlation Between 49326EEN9 and HE Equipment

Can any of the company-specific risk be diversified away by investing in both 49326EEN9 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 49326EEN9 and HE Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KEY 4789 01 JUN 33 and HE Equipment Services, you can compare the effects of market volatilities on 49326EEN9 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 49326EEN9 with a short position of HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of 49326EEN9 and HE Equipment.

Diversification Opportunities for 49326EEN9 and HE Equipment

0.26

Correlation Coefficient

49326EEN9  HE Equipment

Modest diversification

The 3 months correlation between 49326EEN9 and HEES is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding KEY 4789 01 JUN 33 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 49326EEN9 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 KEY 4789 01 JUN 33 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 49326EEN9 i.e., 49326EEN9 and HE Equipment go up and down completely randomly.

Pair Corralation between 49326EEN9 and HE Equipment

Assuming the 90 days trading horizon 49326EEN9 is expected to generate 22.97 times less return on investment than HE Equipment. But when comparing it to its historical volatility, KEY 4789 01 JUN 33 is 6.36 times less risky than HE Equipment. It trades about 0.03 of its potential returns per unit of risk. HE Equipment Services is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,005  in HE Equipment Services on December 24, 2024 and sell it today you would earn a total of  4,498  from holding HE Equipment Services or generate 89.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

KEY 4789 01 JUN 33  vs.  HE Equipment Services

KEY 4789 01

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KEY 4789 01 JUN 33 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 49326EEN9 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the 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 49326EEN9 and HE Equipment

The main advantage of trading using opposite 49326EEN9 and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 49326EEN9 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 KEY 4789 01 JUN 33 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.