Correlation Between Supremex and Hammond Power

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

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

Diversification Opportunities for Supremex and Hammond Power

0.44

Correlation Coefficient

Supremex  Hammond Power

Very weak diversification

The 3 months correlation between Supremex and Hammond is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Supremex and Hammond Power Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammond Power Solutions and Supremex 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 Supremex are associated (or correlated) with Hammond Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammond Power Solutions has no effect on the direction of Supremex i.e., Supremex and Hammond Power go up and down completely randomly.

Pair Corralation between Supremex and Hammond Power

Assuming the 90 days trading horizon Supremex is expected to generate 4.67 times less return on investment than Hammond Power. In addition to that, Supremex is 1.07 times more volatile than Hammond Power Solutions. It trades about 0.05 of its total potential returns per unit of risk. Hammond Power Solutions is currently generating about 0.26 per unit of volatility. If you would invest  9,193  in Hammond Power Solutions on April 24, 2025 and sell it today you would earn a total of  4,008  from holding Hammond Power Solutions or generate 43.6% return on investment over 90 days.

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

Supremex  vs.  Hammond Power Solutions

Supremex

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Supremex are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Supremex may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Hammond Power Solutions

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hammond Power Solutions are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hammond Power unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Supremex and Hammond Power

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

The idea behind Supremex and Hammond Power Solutions 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 Transaction History module to view history of all your transactions and understand their impact on performance.