Correlation Between Hexcel and RATIONAL UNADR

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

By analyzing existing cross correlation between Hexcel and RATIONAL UNADR 1, you can compare the effects of market volatilities on Hexcel and RATIONAL UNADR 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 Hexcel with a short position of RATIONAL UNADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexcel and RATIONAL UNADR.

Diversification Opportunities for Hexcel and RATIONAL UNADR

-0.48

Correlation Coefficient

Hexcel  RATIONAL UNADR

Very good diversification

The 3 months correlation between Hexcel and RATIONAL is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hexcel and RATIONAL UNADR 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RATIONAL UNADR 1 and Hexcel 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 Hexcel are associated (or correlated) with RATIONAL UNADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RATIONAL UNADR 1 has no effect on the direction of Hexcel i.e., Hexcel and RATIONAL UNADR go up and down completely randomly.

Pair Corralation between Hexcel and RATIONAL UNADR

Assuming the 90 days horizon Hexcel is expected to generate 8.56 times less return on investment than RATIONAL UNADR. In addition to that, Hexcel is 1.08 times more volatile than RATIONAL UNADR 1. It trades about 0.01 of its total potential returns per unit of risk. RATIONAL UNADR 1 is currently generating about 0.08 per unit of volatility. If you would invest  2,807  in RATIONAL UNADR 1 on September 26, 2024 and sell it today you would earn a total of  1,233  from holding RATIONAL UNADR 1 or generate 43.93% return on investment over 90 days.

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

Hexcel  vs.  RATIONAL UNADR 1

Hexcel

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hexcel are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hexcel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RATIONAL UNADR 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RATIONAL UNADR 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RATIONAL UNADR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hexcel and RATIONAL UNADR

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

The idea behind Hexcel and RATIONAL UNADR 1 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.