Correlation Between Neometals and Hershey

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

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

Diversification Opportunities for Neometals and Hershey

-0.06

Correlation Coefficient

Neometals  Hershey

Good diversification

The 3 months correlation between Neometals and Hershey is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Neometals and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey and Neometals 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 Neometals are associated (or correlated) with Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Neometals i.e., Neometals and Hershey go up and down completely randomly.

Pair Corralation between Neometals and Hershey

Assuming the 90 days trading horizon Neometals is expected to under-perform the Hershey. In addition to that, Neometals is 2.86 times more volatile than Hershey Co. It trades about -0.09 of its total potential returns per unit of risk. Hershey Co is currently generating about -0.02 per unit of volatility. If you would invest  22,408  in Hershey Co on September 12, 2024 and sell it today you would lose (3,412) from holding Hershey Co or give up 15.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.99%
Values	Daily Returns

Neometals  vs.  Hershey Co

Neometals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neometals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Neometals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hershey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hershey Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hershey is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Neometals and Hershey

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

The idea behind Neometals and Hershey Co 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.