Correlation Between HM Inwest and ADX

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

Diversification Opportunities for HM Inwest and ADX

-0.38
  Correlation Coefficient

Very good diversification

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

Pair Corralation between HM Inwest and ADX

Assuming the 90 days trading horizon HM Inwest SA is expected to generate 0.65 times more return on investment than ADX. However, HM Inwest SA is 1.54 times less risky than ADX. It trades about 0.1 of its potential returns per unit of risk. ADX is currently generating about 0.03 per unit of risk. If you would invest  1,000.00  in HM Inwest SA on September 19, 2024 and sell it today you would earn a total of  3,610  from holding HM Inwest SA or generate 361.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy89.03%
ValuesDaily Returns

HM Inwest SA  vs.  ADX

 Performance 
       Timeline  
HM Inwest SA 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in HM Inwest SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, HM Inwest reported solid returns over the last few months and may actually be approaching a breakup point.
ADX 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ADX has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ADX is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

HM Inwest and ADX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HM Inwest and ADX

The main advantage of trading using opposite HM Inwest and ADX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HM Inwest position performs unexpectedly, ADX 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 ADX will offset losses from the drop in ADX's long position.
The idea behind HM Inwest SA and ADX 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.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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