Correlation Between Hydrogen Engine and Harbor Energy

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

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

Diversification Opportunities for Hydrogen Engine and Harbor Energy

-0.21

Correlation Coefficient

Hydrogen Engine  Harbor Energy

Very good diversification

The 3 months correlation between Hydrogen and Harbor is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hydrogen Engine Center and Harbor Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Energy Transition and Hydrogen Engine 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 Hydrogen Engine Center are associated (or correlated) with Harbor Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Energy Transition has no effect on the direction of Hydrogen Engine i.e., Hydrogen Engine and Harbor Energy go up and down completely randomly.

Pair Corralation between Hydrogen Engine and Harbor Energy

Given the investment horizon of 90 days Hydrogen Engine Center is expected to under-perform the Harbor Energy. In addition to that, Hydrogen Engine is 18.95 times more volatile than Harbor Energy Transition. It trades about -0.06 of its total potential returns per unit of risk. Harbor Energy Transition is currently generating about -0.12 per unit of volatility. If you would invest  1,309  in Harbor Energy Transition on September 15, 2024 and sell it today you would lose (42.00) from holding Harbor Energy Transition or give up 3.21% of portfolio value over 90 days.

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

Hydrogen Engine Center  vs.  Harbor Energy Transition

Hydrogen Engine Center

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hydrogen Engine Center are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Hydrogen Engine reported solid returns over the last few months and may actually be approaching a breakup point.

Harbor Energy Transition

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Energy Transition are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Harbor Energy is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hydrogen Engine and Harbor Energy

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

The idea behind Hydrogen Engine Center and Harbor Energy Transition 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.