Correlation Between Hooker Furniture and Summit Environmental

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

Diversification Opportunities for Hooker Furniture and Summit Environmental

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Hooker and Summit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Summit Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Environmental and Hooker Furniture 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 Hooker Furniture are associated (or correlated) with Summit Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Environmental has no effect on the direction of Hooker Furniture i.e., Hooker Furniture and Summit Environmental go up and down completely randomly.

Pair Corralation between Hooker Furniture and Summit Environmental

If you would invest  1,582  in Hooker Furniture on August 26, 2024 and sell it today you would earn a total of  285.00  from holding Hooker Furniture or generate 18.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hooker Furniture  vs.  Summit Environmental

 Performance 
       Timeline  
Hooker Furniture 

Risk-Adjusted Performance

8 of 100

 
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OK
Compared to the overall equity markets, risk-adjusted returns on investments in Hooker Furniture are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Hooker Furniture unveiled solid returns over the last few months and may actually be approaching a breakup point.
Summit Environmental 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Summit Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Summit Environmental is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Hooker Furniture and Summit Environmental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hooker Furniture and Summit Environmental

The main advantage of trading using opposite Hooker Furniture and Summit Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture position performs unexpectedly, Summit Environmental 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 Summit Environmental will offset losses from the drop in Summit Environmental's long position.
The idea behind Hooker Furniture and Summit Environmental 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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