Correlation Between Schwager and Hites SA

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

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

Diversification Opportunities for Schwager and Hites SA

0.16

Correlation Coefficient

Schwager  Hites SA

Average diversification

The 3 months correlation between Schwager and Hites is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Schwager and Hites SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hites SA and Schwager 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 Schwager are associated (or correlated) with Hites SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hites SA has no effect on the direction of Schwager i.e., Schwager and Hites SA go up and down completely randomly.

Pair Corralation between Schwager and Hites SA

Assuming the 90 days trading horizon Schwager is expected to generate 0.3 times more return on investment than Hites SA. However, Schwager is 3.29 times less risky than Hites SA. It trades about 0.0 of its potential returns per unit of risk. Hites SA is currently generating about -0.2 per unit of risk. If you would invest  108.00  in Schwager on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Schwager or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.86%
Values	Daily Returns

Schwager  vs.  Hites SA

Schwager

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwager has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Schwager is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Hites SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hites SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Schwager and Hites SA

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

The idea behind Schwager and Hites SA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.