Correlation Between Somnigroup International and Hamilton Beach

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

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

Diversification Opportunities for Somnigroup International and Hamilton Beach

-0.55

Correlation Coefficient

Somnigroup International  Hamilton Beach

Excellent diversification

The 3 months correlation between Somnigroup and Hamilton is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Somnigroup International and Hamilton Beach Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Beach Brands and Somnigroup International 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 Somnigroup International are associated (or correlated) with Hamilton Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Beach Brands has no effect on the direction of Somnigroup International i.e., Somnigroup International and Hamilton Beach go up and down completely randomly.

Pair Corralation between Somnigroup International and Hamilton Beach

Considering the 90-day investment horizon Somnigroup International is expected to generate 0.59 times more return on investment than Hamilton Beach. However, Somnigroup International is 1.7 times less risky than Hamilton Beach. It trades about -0.03 of its potential returns per unit of risk. Hamilton Beach Brands is currently generating about -0.03 per unit of risk. If you would invest  6,635  in Somnigroup International on February 5, 2025 and sell it today you would lose (435.00) from holding Somnigroup International or give up 6.56% of portfolio value over 90 days.

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

Somnigroup International  vs.  Hamilton Beach Brands

Somnigroup International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Somnigroup International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Somnigroup International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Hamilton Beach Brands

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Somnigroup International and Hamilton Beach

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

The idea behind Somnigroup International and Hamilton Beach Brands 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.