Correlation Between Adairs and ImExHS
Can any of the company-specific risk be diversified away by investing in both Adairs and ImExHS 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 Adairs and ImExHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adairs and ImExHS, you can compare the effects of market volatilities on Adairs and ImExHS 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 Adairs with a short position of ImExHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adairs and ImExHS.
Diversification Opportunities for Adairs and ImExHS
Pay attention - limited upside
The 3 months correlation between Adairs and ImExHS is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Adairs and ImExHS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImExHS and Adairs 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 Adairs are associated (or correlated) with ImExHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImExHS has no effect on the direction of Adairs i.e., Adairs and ImExHS go up and down completely randomly.
Pair Corralation between Adairs and ImExHS
Assuming the 90 days trading horizon Adairs is expected to generate 0.94 times more return on investment than ImExHS. However, Adairs is 1.06 times less risky than ImExHS. It trades about 0.07 of its potential returns per unit of risk. ImExHS is currently generating about -0.02 per unit of risk. If you would invest 127.00 in Adairs on August 31, 2024 and sell it today you would earn a total of 128.00 from holding Adairs or generate 100.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.78% |
| Values | Daily Returns |
Adairs vs. ImExHS
Performance |
| Timeline |
| Adairs |
| ImExHS |
Adairs and ImExHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adairs and ImExHS
The main advantage of trading using opposite Adairs and ImExHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adairs position performs unexpectedly, ImExHS 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 ImExHS will offset losses from the drop in ImExHS's long position.| Adairs vs. Future Generation Global | Adairs vs. Rubicon Water | Adairs vs. Kinatico | Adairs vs. Jade Gas Holdings |
| ImExHS vs. Andean Silver Limited | ImExHS vs. Hotel Property Investments | ImExHS vs. Super Retail Group | ImExHS vs. Black Rock Mining |
Check out your portfolio center.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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