Correlation Between HEG and Hybrid Financial

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

By analyzing existing cross correlation between HEG Limited and Hybrid Financial Services, you can compare the effects of market volatilities on HEG and Hybrid Financial 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 HEG with a short position of Hybrid Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEG and Hybrid Financial.

Diversification Opportunities for HEG and Hybrid Financial

0.06

Correlation Coefficient

HEG  Hybrid Financial

Significant diversification

The 3 months correlation between HEG and Hybrid is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding HEG Limited and Hybrid Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hybrid Financial Services and HEG 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 HEG Limited are associated (or correlated) with Hybrid Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hybrid Financial Services has no effect on the direction of HEG i.e., HEG and Hybrid Financial go up and down completely randomly.

Pair Corralation between HEG and Hybrid Financial

Assuming the 90 days trading horizon HEG Limited is expected to generate 1.56 times more return on investment than Hybrid Financial. However, HEG is 1.56 times more volatile than Hybrid Financial Services. It trades about 0.11 of its potential returns per unit of risk. Hybrid Financial Services is currently generating about 0.1 per unit of risk. If you would invest  45,336  in HEG Limited on September 20, 2024 and sell it today you would earn a total of  11,209  from holding HEG Limited or generate 24.72% return on investment over 90 days.

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

HEG Limited  vs.  Hybrid Financial Services

HEG Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HEG Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, HEG exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hybrid Financial Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hybrid Financial Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Hybrid Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HEG and Hybrid Financial

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

The idea behind HEG Limited and Hybrid Financial Services 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.