Correlation Between Smiths Group and Hanison Construction
Can any of the company-specific risk be diversified away by investing in both Smiths Group and Hanison Construction 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 Smiths Group and Hanison Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smiths Group plc and Hanison Construction Holdings, you can compare the effects of market volatilities on Smiths Group and Hanison Construction 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 Smiths Group with a short position of Hanison Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smiths Group and Hanison Construction.
Diversification Opportunities for Smiths Group and Hanison Construction
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Smiths and Hanison is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Smiths Group plc and Hanison Construction Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanison Construction and Smiths Group 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 Smiths Group plc are associated (or correlated) with Hanison Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanison Construction has no effect on the direction of Smiths Group i.e., Smiths Group and Hanison Construction go up and down completely randomly.
Pair Corralation between Smiths Group and Hanison Construction
Assuming the 90 days trading horizon Smiths Group plc is expected to generate 2.86 times more return on investment than Hanison Construction. However, Smiths Group is 2.86 times more volatile than Hanison Construction Holdings. It trades about 0.05 of its potential returns per unit of risk. Hanison Construction Holdings is currently generating about 0.06 per unit of risk. If you would invest 1,811 in Smiths Group plc on September 14, 2024 and sell it today you would earn a total of 307.00 from holding Smiths Group plc or generate 16.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.64% |
| Values | Daily Returns |
Smiths Group plc vs. Hanison Construction Holdings
Performance |
| Timeline |
| Smiths Group plc |
| Hanison Construction |
Smiths Group and Hanison Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smiths Group and Hanison Construction
The main advantage of trading using opposite Smiths Group and Hanison Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smiths Group position performs unexpectedly, Hanison Construction 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 Hanison Construction will offset losses from the drop in Hanison Construction's long position.| Smiths Group vs. Hanison Construction Holdings | Smiths Group vs. Sumitomo Mitsui Construction | Smiths Group vs. Titan Machinery | Smiths Group vs. Ribbon Communications |
| Hanison Construction vs. Superior Plus Corp | Hanison Construction vs. SIVERS SEMICONDUCTORS AB | Hanison Construction vs. Norsk Hydro ASA | Hanison Construction vs. Reliance Steel Aluminum |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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