Correlation Between IMPERIAL TOBACCO and Hastings Technology
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and Hastings Technology 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 IMPERIAL TOBACCO and Hastings Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Hastings Technology Metals, you can compare the effects of market volatilities on IMPERIAL TOBACCO and Hastings Technology 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 IMPERIAL TOBACCO with a short position of Hastings Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Hastings Technology.
Diversification Opportunities for IMPERIAL TOBACCO and Hastings Technology
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between IMPERIAL and Hastings is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Hastings Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hastings Technology and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO are associated (or correlated) with Hastings Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hastings Technology has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Hastings Technology go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Hastings Technology
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.16 times more return on investment than Hastings Technology. However, IMPERIAL TOBACCO is 6.36 times less risky than Hastings Technology. It trades about 0.1 of its potential returns per unit of risk. Hastings Technology Metals is currently generating about -0.03 per unit of risk. If you would invest 1,998 in IMPERIAL TOBACCO on August 31, 2024 and sell it today you would earn a total of 1,113 from holding IMPERIAL TOBACCO or generate 55.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Hastings Technology Metals
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Hastings Technology |
IMPERIAL TOBACCO and Hastings Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Hastings Technology
The main advantage of trading using opposite IMPERIAL TOBACCO and Hastings Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, Hastings Technology 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 Hastings Technology will offset losses from the drop in Hastings Technology's long position.| IMPERIAL TOBACCO vs. SIVERS SEMICONDUCTORS AB | IMPERIAL TOBACCO vs. Darden Restaurants | IMPERIAL TOBACCO vs. Reliance Steel Aluminum | IMPERIAL TOBACCO vs. Q2M Managementberatung AG |
| Hastings Technology vs. BHP Group Limited | Hastings Technology vs. BHP Group Limited | Hastings Technology vs. Rio Tinto Group | Hastings Technology vs. Rio Tinto Group |
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 Stocks Directory module to find actively traded stocks across global markets.
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