Correlation Between Hemisphere Energy and Winpak

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

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

Diversification Opportunities for Hemisphere Energy and Winpak

0.24

Correlation Coefficient

Hemisphere Energy  Winpak

Modest diversification

The 3 months correlation between Hemisphere and Winpak is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak and Hemisphere Energy 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 Hemisphere Energy are associated (or correlated) with Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Hemisphere Energy i.e., Hemisphere Energy and Winpak go up and down completely randomly.

Pair Corralation between Hemisphere Energy and Winpak

Assuming the 90 days horizon Hemisphere Energy is expected to generate 1.03 times less return on investment than Winpak. In addition to that, Hemisphere Energy is 1.38 times more volatile than Winpak. It trades about 0.08 of its total potential returns per unit of risk. Winpak is currently generating about 0.12 per unit of volatility. If you would invest  4,495  in Winpak on September 13, 2024 and sell it today you would earn a total of  450.00  from holding Winpak or generate 10.01% return on investment over 90 days.

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

Hemisphere Energy  vs.  Winpak

Hemisphere Energy

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hemisphere Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Hemisphere Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Winpak

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Winpak are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Winpak may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hemisphere Energy and Winpak

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

The idea behind Hemisphere Energy and Winpak 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..