Correlation Between Harn Engineering and G Capital

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

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

Diversification Opportunities for Harn Engineering and G Capital

0.55

Correlation Coefficient

Harn Engineering  G Capital

Very weak diversification

The 3 months correlation between Harn and GCAP is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Harn Engineering Solutions and G Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Capital Public and Harn Engineering 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 Harn Engineering Solutions are associated (or correlated) with G Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Capital Public has no effect on the direction of Harn Engineering i.e., Harn Engineering and G Capital go up and down completely randomly.

Pair Corralation between Harn Engineering and G Capital

Assuming the 90 days trading horizon Harn Engineering Solutions is expected to generate 0.17 times more return on investment than G Capital. However, Harn Engineering Solutions is 5.83 times less risky than G Capital. It trades about 0.0 of its potential returns per unit of risk. G Capital Public is currently generating about -0.32 per unit of risk. If you would invest  212.00  in Harn Engineering Solutions on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Harn Engineering Solutions or generate 0.0% return on investment over 90 days.

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

Harn Engineering Solutions  vs.  G Capital Public

Harn Engineering Sol

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harn Engineering Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Harn Engineering is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

G Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Harn Engineering and G Capital

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

The idea behind Harn Engineering Solutions and G Capital Public 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.