Correlation Between Topbuild Corp and Hurco Companies

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

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

Diversification Opportunities for Topbuild Corp and Hurco Companies

-0.25

Correlation Coefficient

Topbuild Corp  Hurco Companies

Very good diversification

The 3 months correlation between Topbuild and Hurco is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Topbuild Corp and Hurco Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurco Companies and Topbuild Corp 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 Topbuild Corp are associated (or correlated) with Hurco Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurco Companies has no effect on the direction of Topbuild Corp i.e., Topbuild Corp and Hurco Companies go up and down completely randomly.

Pair Corralation between Topbuild Corp and Hurco Companies

Considering the 90-day investment horizon Topbuild Corp is expected to under-perform the Hurco Companies. But the stock apears to be less risky and, when comparing its historical volatility, Topbuild Corp is 1.18 times less risky than Hurco Companies. The stock trades about -0.07 of its potential returns per unit of risk. The Hurco Companies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,850  in Hurco Companies on September 16, 2024 and sell it today you would earn a total of  94.00  from holding Hurco Companies or generate 5.08% return on investment over 90 days.

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

Topbuild Corp  vs.  Hurco Companies

Topbuild Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hurco Companies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hurco Companies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Hurco Companies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Topbuild Corp and Hurco Companies

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

The idea behind Topbuild Corp and Hurco Companies 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.