Correlation Between Hammond Manufacturing and Aurora Solar
Can any of the company-specific risk be diversified away by investing in both Hammond Manufacturing and Aurora Solar 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 Hammond Manufacturing and Aurora Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hammond Manufacturing and Aurora Solar Technologies, you can compare the effects of market volatilities on Hammond Manufacturing and Aurora Solar 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 Hammond Manufacturing with a short position of Aurora Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hammond Manufacturing and Aurora Solar.
Diversification Opportunities for Hammond Manufacturing and Aurora Solar
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hammond and Aurora is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hammond Manufacturing and Aurora Solar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Solar Technologies and Hammond Manufacturing 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 Hammond Manufacturing are associated (or correlated) with Aurora Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Solar Technologies has no effect on the direction of Hammond Manufacturing i.e., Hammond Manufacturing and Aurora Solar go up and down completely randomly.
Pair Corralation between Hammond Manufacturing and Aurora Solar
Assuming the 90 days trading horizon Hammond Manufacturing is expected to generate 0.22 times more return on investment than Aurora Solar. However, Hammond Manufacturing is 4.49 times less risky than Aurora Solar. It trades about 0.03 of its potential returns per unit of risk. Aurora Solar Technologies is currently generating about -0.03 per unit of risk. If you would invest 1,001 in Hammond Manufacturing on September 3, 2024 and sell it today you would earn a total of 40.00 from holding Hammond Manufacturing or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hammond Manufacturing vs. Aurora Solar Technologies
Performance |
| Timeline |
| Hammond Manufacturing |
| Aurora Solar Technologies |
Hammond Manufacturing and Aurora Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hammond Manufacturing and Aurora Solar
The main advantage of trading using opposite Hammond Manufacturing and Aurora Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hammond Manufacturing position performs unexpectedly, Aurora Solar 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 Aurora Solar will offset losses from the drop in Aurora Solar's long position.| Hammond Manufacturing vs. Hammond Power Solutions | Hammond Manufacturing vs. ADF Group | Hammond Manufacturing vs. Goodfellow | Hammond Manufacturing vs. Melcor Developments |
| Aurora Solar vs. Solar Alliance Energy | Aurora Solar vs. Lite Access Technologies | Aurora Solar vs. Braille Energy Systems |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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