Correlation Between HYBRIGENICS and Union Pacific

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

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

Diversification Opportunities for HYBRIGENICS and Union Pacific

-0.43

Correlation Coefficient

HYBRIGENICS  Union Pacific

Very good diversification

The 3 months correlation between HYBRIGENICS and Union is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding HYBRIGENICS A and Union Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Pacific and HYBRIGENICS 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 HYBRIGENICS A are associated (or correlated) with Union Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Pacific has no effect on the direction of HYBRIGENICS i.e., HYBRIGENICS and Union Pacific go up and down completely randomly.

Pair Corralation between HYBRIGENICS and Union Pacific

Assuming the 90 days trading horizon HYBRIGENICS A is expected to generate 4.1 times more return on investment than Union Pacific. However, HYBRIGENICS is 4.1 times more volatile than Union Pacific. It trades about 0.06 of its potential returns per unit of risk. Union Pacific is currently generating about 0.02 per unit of risk. If you would invest  0.70  in HYBRIGENICS A on September 2, 2024 and sell it today you would earn a total of  0.08  from holding HYBRIGENICS A or generate 11.43% return on investment over 90 days.

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

HYBRIGENICS A   vs.  Union Pacific

HYBRIGENICS A

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HYBRIGENICS A are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, HYBRIGENICS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Union Pacific

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Union Pacific are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Union Pacific is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HYBRIGENICS and Union Pacific

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

The idea behind HYBRIGENICS A and Union Pacific 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.