Correlation Between HYDROFARM HLD and CRYOLIFE

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

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

Diversification Opportunities for HYDROFARM HLD and CRYOLIFE

0.37

Correlation Coefficient

HYDROFARM HLD  CRYOLIFE

Weak diversification

The 3 months correlation between HYDROFARM and CRYOLIFE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and CRYOLIFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRYOLIFE and HYDROFARM HLD 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 HYDROFARM HLD GRP are associated (or correlated) with CRYOLIFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRYOLIFE has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and CRYOLIFE go up and down completely randomly.

Pair Corralation between HYDROFARM HLD and CRYOLIFE

Assuming the 90 days trading horizon HYDROFARM HLD is expected to generate 21.54 times less return on investment than CRYOLIFE. In addition to that, HYDROFARM HLD is 2.62 times more volatile than CRYOLIFE. It trades about 0.0 of its total potential returns per unit of risk. CRYOLIFE is currently generating about 0.13 per unit of volatility. If you would invest  2,385  in CRYOLIFE on September 28, 2024 and sell it today you would earn a total of  335.00  from holding CRYOLIFE or generate 14.05% return on investment over 90 days.

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

HYDROFARM HLD GRP  vs.  CRYOLIFE

HYDROFARM HLD GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HYDROFARM HLD GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HYDROFARM HLD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CRYOLIFE

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CRYOLIFE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, CRYOLIFE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HYDROFARM HLD and CRYOLIFE

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

The idea behind HYDROFARM HLD GRP and CRYOLIFE 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.