Correlation Between HALI34 and Metalfrio Solutions

Can any of the company-specific risk be diversified away by investing in both HALI34 and Metalfrio Solutions 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 HALI34 and Metalfrio Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HALI34 and Metalfrio Solutions SA, you can compare the effects of market volatilities on HALI34 and Metalfrio Solutions 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 HALI34 with a short position of Metalfrio Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of HALI34 and Metalfrio Solutions.

Diversification Opportunities for HALI34 and Metalfrio Solutions

0.41

Correlation Coefficient

HALI34  Metalfrio Solutions

Very weak diversification

The 3 months correlation between HALI34 and Metalfrio is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding HALI34 and Metalfrio Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalfrio Solutions and HALI34 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 HALI34 are associated (or correlated) with Metalfrio Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalfrio Solutions has no effect on the direction of HALI34 i.e., HALI34 and Metalfrio Solutions go up and down completely randomly.

Pair Corralation between HALI34 and Metalfrio Solutions

Assuming the 90 days trading horizon HALI34 is expected to under-perform the Metalfrio Solutions. But the stock apears to be less risky and, when comparing its historical volatility, HALI34 is 2.34 times less risky than Metalfrio Solutions. The stock trades about 0.0 of its potential returns per unit of risk. The Metalfrio Solutions SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  17,499  in Metalfrio Solutions SA on September 24, 2024 and sell it today you would earn a total of  300.00  from holding Metalfrio Solutions SA or generate 1.71% return on investment over 90 days.

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

HALI34  vs.  Metalfrio Solutions SA

HALI34

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HALI34 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, HALI34 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Metalfrio Solutions

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metalfrio Solutions SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Metalfrio Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HALI34 and Metalfrio Solutions

The main advantage of trading using opposite HALI34 and Metalfrio Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HALI34 position performs unexpectedly, Metalfrio Solutions 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 Metalfrio Solutions will offset losses from the drop in Metalfrio Solutions' long position.

The idea behind HALI34 and Metalfrio Solutions SA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.