Correlation Between Atlantica Sustainable and Hawaiian Electric

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

By analyzing existing cross correlation between Atlantica Sustainable Infrastructure and Hawaiian Electric Industries, you can compare the effects of market volatilities on Atlantica Sustainable and Hawaiian Electric 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 Atlantica Sustainable with a short position of Hawaiian Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantica Sustainable and Hawaiian Electric.

Diversification Opportunities for Atlantica Sustainable and Hawaiian Electric

-0.37

Correlation Coefficient

Atlantica Sustainable  Hawaiian Electric

Very good diversification

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

Pair Corralation between Atlantica Sustainable and Hawaiian Electric

Allowing for the 90-day total investment horizon Atlantica Sustainable is expected to generate 5.98 times less return on investment than Hawaiian Electric. But when comparing it to its historical volatility, Atlantica Sustainable Infrastructure is 30.48 times less risky than Hawaiian Electric. It trades about 0.12 of its potential returns per unit of risk. Hawaiian Electric Industries is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,056  in Hawaiian Electric Industries on September 3, 2024 and sell it today you would lose (21.00) from holding Hawaiian Electric Industries or give up 1.99% of portfolio value over 90 days.

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

Atlantica Sustainable Infrastr  vs.  Hawaiian Electric Industries

Atlantica Sustainable

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantica Sustainable Infrastructure are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Atlantica Sustainable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hawaiian Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawaiian Electric Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Atlantica Sustainable and Hawaiian Electric

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

The idea behind Atlantica Sustainable Infrastructure and Hawaiian Electric Industries 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.