Correlation Between Strickland Metals and Hansen Technologies

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

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

Diversification Opportunities for Strickland Metals and Hansen Technologies

-0.08

Correlation Coefficient

Strickland Metals  Hansen Technologies

Good diversification

The 3 months correlation between Strickland and Hansen is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Strickland Metals and Hansen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansen Technologies and Strickland Metals 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 Strickland Metals are associated (or correlated) with Hansen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansen Technologies has no effect on the direction of Strickland Metals i.e., Strickland Metals and Hansen Technologies go up and down completely randomly.

Pair Corralation between Strickland Metals and Hansen Technologies

Assuming the 90 days trading horizon Strickland Metals is expected to generate 4.0 times more return on investment than Hansen Technologies. However, Strickland Metals is 4.0 times more volatile than Hansen Technologies. It trades about 0.04 of its potential returns per unit of risk. Hansen Technologies is currently generating about 0.02 per unit of risk. If you would invest  7.00  in Strickland Metals on September 26, 2024 and sell it today you would earn a total of  1.00  from holding Strickland Metals or generate 14.29% return on investment over 90 days.

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

Strickland Metals  vs.  Hansen Technologies

Strickland Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strickland Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Hansen Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hansen Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hansen Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strickland Metals and Hansen Technologies

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

The idea behind Strickland Metals and Hansen Technologies 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.