Correlation Between Hexcel and Park Electrochemical
Can any of the company-specific risk be diversified away by investing in both Hexcel and Park Electrochemical 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 Hexcel and Park Electrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexcel and Park Electrochemical, you can compare the effects of market volatilities on Hexcel and Park Electrochemical 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 Hexcel with a short position of Park Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexcel and Park Electrochemical.
Diversification Opportunities for Hexcel and Park Electrochemical
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hexcel and Park is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hexcel and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical and Hexcel 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 Hexcel are associated (or correlated) with Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of Hexcel i.e., Hexcel and Park Electrochemical go up and down completely randomly.
Pair Corralation between Hexcel and Park Electrochemical
Considering the 90-day investment horizon Hexcel is expected to under-perform the Park Electrochemical. But the stock apears to be less risky and, when comparing its historical volatility, Hexcel is 1.29 times less risky than Park Electrochemical. The stock trades about -0.19 of its potential returns per unit of risk. The Park Electrochemical is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,453 in Park Electrochemical on August 23, 2024 and sell it today you would earn a total of 50.00 from holding Park Electrochemical or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexcel vs. Park Electrochemical
Performance |
| Timeline |
| Hexcel |
| Park Electrochemical |
Hexcel and Park Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexcel and Park Electrochemical
The main advantage of trading using opposite Hexcel and Park Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexcel position performs unexpectedly, Park Electrochemical 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 Park Electrochemical will offset losses from the drop in Park Electrochemical's long position.The idea behind Hexcel and Park Electrochemical 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.| Park Electrochemical vs. Small Cap Core | Park Electrochemical vs. Freedom Holding Corp | Park Electrochemical vs. Gfl Environmental Holdings | Park Electrochemical vs. Growth Fund Of |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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