Correlation Between Technical Communications and Hawkins

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

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

Diversification Opportunities for Technical Communications and Hawkins

0.09

Correlation Coefficient

Technical Communications  Hawkins

Significant diversification

The 3 months correlation between Technical and Hawkins is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Technical Communications and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and Technical Communications 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 Technical Communications 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 Technical Communications i.e., Technical Communications and Hawkins go up and down completely randomly.

Pair Corralation between Technical Communications and Hawkins

If you would invest  11,986  in Hawkins on September 13, 2024 and sell it today you would earn a total of  1,715  from holding Hawkins or generate 14.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Technical Communications  vs.  Hawkins

Technical Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Technical Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Technical Communications is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Hawkins

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 7 (%) 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 Technical Communications and Hawkins

The main advantage of trading using opposite Technical Communications and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technical Communications 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 Technical Communications 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.