Correlation Between H B and HydroGraph Clean

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

By analyzing existing cross correlation between H B Fuller and HydroGraph Clean Power, you can compare the effects of market volatilities on H B and HydroGraph Clean 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 H B with a short position of HydroGraph Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of H B and HydroGraph Clean.

Diversification Opportunities for H B and HydroGraph Clean

0.37

Correlation Coefficient

H B  HydroGraph Clean

Weak diversification

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

Pair Corralation between H B and HydroGraph Clean

Considering the 90-day investment horizon H B is expected to generate 8.98 times less return on investment than HydroGraph Clean. But when comparing it to its historical volatility, H B Fuller is 4.54 times less risky than HydroGraph Clean. It trades about 0.03 of its potential returns per unit of risk. HydroGraph Clean Power is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7.10  in HydroGraph Clean Power on September 12, 2024 and sell it today you would earn a total of  2.90  from holding HydroGraph Clean Power or generate 40.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	89.43%
Values	Daily Returns

H B Fuller  vs.  HydroGraph Clean Power

H B Fuller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, H B is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

HydroGraph Clean Power

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days HydroGraph Clean Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, HydroGraph Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with H B and HydroGraph Clean

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

The idea behind H B Fuller and HydroGraph Clean Power 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.