Correlation Between Hanison Construction and American Electric
Can any of the company-specific risk be diversified away by investing in both Hanison Construction and American Electric 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 Hanison Construction and American Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanison Construction Holdings and American Electric Power, you can compare the effects of market volatilities on Hanison Construction and American Electric 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 Hanison Construction with a short position of American Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanison Construction and American Electric.
Diversification Opportunities for Hanison Construction and American Electric
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hanison and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hanison Construction Holdings and American Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Electric Power and Hanison Construction 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 Hanison Construction Holdings are associated (or correlated) with American Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Electric Power has no effect on the direction of Hanison Construction i.e., Hanison Construction and American Electric go up and down completely randomly.
Pair Corralation between Hanison Construction and American Electric
Assuming the 90 days trading horizon Hanison Construction Holdings is expected to generate 2.05 times more return on investment than American Electric. However, Hanison Construction is 2.05 times more volatile than American Electric Power. It trades about 0.06 of its potential returns per unit of risk. American Electric Power is currently generating about 0.06 per unit of risk. If you would invest 8.53 in Hanison Construction Holdings on August 27, 2024 and sell it today you would earn a total of 5.47 from holding Hanison Construction Holdings or generate 64.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Hanison Construction Holdings vs. American Electric Power
Performance |
| Timeline |
| Hanison Construction |
| American Electric Power |
Hanison Construction and American Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanison Construction and American Electric
The main advantage of trading using opposite Hanison Construction and American Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanison Construction position performs unexpectedly, American Electric 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 American Electric will offset losses from the drop in American Electric's long position.| Hanison Construction vs. China Railway Construction | Hanison Construction vs. AECOM | Hanison Construction vs. Superior Plus Corp | Hanison Construction vs. NMI Holdings |
| American Electric vs. Penta Ocean Construction Co | American Electric vs. Granite Construction | American Electric vs. Hanison Construction Holdings | American Electric vs. United Airlines Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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