Correlation Between HLB Power and EO Technics

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

By analyzing existing cross correlation between HLB Power Co and EO Technics Co, you can compare the effects of market volatilities on HLB Power and EO Technics 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 HLB Power with a short position of EO Technics. Check out your portfolio center. Please also check ongoing floating volatility patterns of HLB Power and EO Technics.

Diversification Opportunities for HLB Power and EO Technics

0.61

Correlation Coefficient

HLB Power  EO Technics

Poor diversification

The 3 months correlation between HLB and 039030 is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding HLB Power Co and EO Technics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EO Technics and HLB Power 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 HLB Power Co are associated (or correlated) with EO Technics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EO Technics has no effect on the direction of HLB Power i.e., HLB Power and EO Technics go up and down completely randomly.

Pair Corralation between HLB Power and EO Technics

Assuming the 90 days trading horizon HLB Power Co is expected to under-perform the EO Technics. In addition to that, HLB Power is 1.26 times more volatile than EO Technics Co. It trades about -0.05 of its total potential returns per unit of risk. EO Technics Co is currently generating about -0.05 per unit of volatility. If you would invest  14,730,000  in EO Technics Co on September 5, 2024 and sell it today you would lose (2,220,000) from holding EO Technics Co or give up 15.07% of portfolio value over 90 days.

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

HLB Power Co  vs.  EO Technics Co

HLB Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HLB Power Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

EO Technics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EO Technics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with HLB Power and EO Technics

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

The idea behind HLB Power Co and EO Technics Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.