Correlation Between Huntsman and Flameret

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

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

Diversification Opportunities for Huntsman and Flameret

0.58

Correlation Coefficient

Huntsman  Flameret

Very weak diversification

The 3 months correlation between Huntsman and Flameret is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman and Flameret in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flameret and Huntsman 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 Huntsman are associated (or correlated) with Flameret. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flameret has no effect on the direction of Huntsman i.e., Huntsman and Flameret go up and down completely randomly.

Pair Corralation between Huntsman and Flameret

Considering the 90-day investment horizon Huntsman is expected to under-perform the Flameret. But the stock apears to be less risky and, when comparing its historical volatility, Huntsman is 13.77 times less risky than Flameret. The stock trades about -0.31 of its potential returns per unit of risk. The Flameret is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  0.08  in Flameret on September 26, 2024 and sell it today you would lose (0.06) from holding Flameret or give up 75.0% of portfolio value over 90 days.

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

Huntsman  vs.  Flameret

Huntsman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huntsman has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Flameret

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flameret has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Huntsman and Flameret

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

The idea behind Huntsman and Flameret 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.

Check out your portfolio center.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.