Correlation Between Hilton Metal and HMT

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

Diversification Opportunities for Hilton Metal and HMT

0.4
  Correlation Coefficient
 HMT

Very weak diversification

The 3 months correlation between Hilton and HMT is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Metal Forging and HMT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMT Limited and Hilton Metal 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 Hilton Metal Forging are associated (or correlated) with HMT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMT Limited has no effect on the direction of Hilton Metal i.e., Hilton Metal and HMT go up and down completely randomly.

Pair Corralation between Hilton Metal and HMT

Assuming the 90 days trading horizon Hilton Metal Forging is expected to under-perform the HMT. In addition to that, Hilton Metal is 1.09 times more volatile than HMT Limited. It trades about -0.01 of its total potential returns per unit of risk. HMT Limited is currently generating about 0.07 per unit of volatility. If you would invest  2,650  in HMT Limited on November 19, 2024 and sell it today you would earn a total of  3,098  from holding HMT Limited or generate 116.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.79%
ValuesDaily Returns

Hilton Metal Forging  vs.  HMT Limited

 Performance 
       Timeline  
Hilton Metal Forging 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Hilton Metal Forging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hilton Metal is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
HMT Limited 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days HMT Limited 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 March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hilton Metal and HMT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hilton Metal and HMT

The main advantage of trading using opposite Hilton Metal and HMT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Metal position performs unexpectedly, HMT 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 HMT will offset losses from the drop in HMT's long position.
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The idea behind Hilton Metal Forging and HMT Limited 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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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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