Correlation Between Hardide PLC and CNH Industrial

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Can any of the company-specific risk be diversified away by investing in both Hardide PLC and CNH Industrial 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 Hardide PLC and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hardide PLC and CNH Industrial NV, you can compare the effects of market volatilities on Hardide PLC and CNH Industrial 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 Hardide PLC with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hardide PLC and CNH Industrial.

Diversification Opportunities for Hardide PLC and CNH Industrial

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Hardide and CNH is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hardide PLC and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV and Hardide PLC 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 Hardide PLC are associated (or correlated) with CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Hardide PLC i.e., Hardide PLC and CNH Industrial go up and down completely randomly.

Pair Corralation between Hardide PLC and CNH Industrial

Assuming the 90 days trading horizon Hardide PLC is expected to under-perform the CNH Industrial. In addition to that, Hardide PLC is 1.13 times more volatile than CNH Industrial NV. It trades about -0.2 of its total potential returns per unit of risk. CNH Industrial NV is currently generating about 0.13 per unit of volatility. If you would invest  1,055  in CNH Industrial NV on August 30, 2024 and sell it today you would earn a total of  133.00  from holding CNH Industrial NV or generate 12.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hardide PLC  vs.  CNH Industrial NV

 Performance 
       Timeline  
Hardide PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hardide PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
CNH Industrial NV 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in CNH Industrial NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, CNH Industrial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hardide PLC and CNH Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hardide PLC and CNH Industrial

The main advantage of trading using opposite Hardide PLC and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hardide PLC position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.
The idea behind Hardide PLC and CNH Industrial NV 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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