Correlation Between Salomon A and Hiron Trade

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

By analyzing existing cross correlation between Salomon A Angel and Hiron Trade Investments Industrial, you can compare the effects of market volatilities on Salomon A and Hiron Trade 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 Salomon A with a short position of Hiron Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salomon A and Hiron Trade.

Diversification Opportunities for Salomon A and Hiron Trade

-0.7

Correlation Coefficient

Salomon A  Hiron Trade

Excellent diversification

The 3 months correlation between Salomon and Hiron is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Salomon A Angel and Hiron Trade Investments Indust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiron Trade Investments and Salomon A 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 Salomon A Angel are associated (or correlated) with Hiron Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiron Trade Investments has no effect on the direction of Salomon A i.e., Salomon A and Hiron Trade go up and down completely randomly.

Pair Corralation between Salomon A and Hiron Trade

Assuming the 90 days trading horizon Salomon A Angel is expected to under-perform the Hiron Trade. In addition to that, Salomon A is 1.2 times more volatile than Hiron Trade Investments Industrial. It trades about -0.05 of its total potential returns per unit of risk. Hiron Trade Investments Industrial is currently generating about 0.13 per unit of volatility. If you would invest  18,735,000  in Hiron Trade Investments Industrial on February 2, 2024 and sell it today you would earn a total of  1,357,000  from holding Hiron Trade Investments Industrial or generate 7.24% return on investment over 90 days.

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

Salomon A Angel  vs.  Hiron Trade Investments Indust

Salomon A Angel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salomon A Angel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hiron Trade Investments

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Hiron Trade Investments Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Hiron Trade may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Salomon A and Hiron Trade

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

The idea behind Salomon A Angel and Hiron Trade Investments Industrial 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..