Correlation Between Joint Stock and Hawkins

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

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

Diversification Opportunities for Joint Stock and Hawkins

-0.21

Correlation Coefficient

Joint Stock  Hawkins

Very good diversification

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

Pair Corralation between Joint Stock and Hawkins

Given the investment horizon of 90 days Joint Stock is expected to generate 1.18 times less return on investment than Hawkins. In addition to that, Joint Stock is 1.21 times more volatile than Hawkins. It trades about 0.08 of its total potential returns per unit of risk. Hawkins is currently generating about 0.12 per unit of volatility. If you would invest  3,859  in Hawkins on September 14, 2024 and sell it today you would earn a total of  9,140  from holding Hawkins or generate 236.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	64.85%
Values	Daily Returns

Joint Stock  vs.  Hawkins

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Hawkins

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Hawkins displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Joint Stock and Hawkins

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

The idea behind Joint Stock and Hawkins 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.