Correlation Between Waste Management and Hastings Technology
Can any of the company-specific risk be diversified away by investing in both Waste Management 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 Waste Management and Hastings Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Hastings Technology Metals, you can compare the effects of market volatilities on Waste Management 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 Waste Management with a short position of Hastings Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Hastings Technology.
Diversification Opportunities for Waste Management and Hastings Technology
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Waste and Hastings is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Hastings Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hastings Technology and Waste Management 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 Waste Management 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 Waste Management i.e., Waste Management and Hastings Technology go up and down completely randomly.
Pair Corralation between Waste Management and Hastings Technology
Assuming the 90 days trading horizon Waste Management is expected to under-perform the Hastings Technology. But the stock apears to be less risky and, when comparing its historical volatility, Waste Management is 5.92 times less risky than Hastings Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Hastings Technology Metals is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Hastings Technology Metals on September 12, 2024 and sell it today you would earn a total of 3.00 from holding Hastings Technology Metals or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. Hastings Technology Metals
Performance |
| Timeline |
| Waste Management |
| Hastings Technology |
Waste Management and Hastings Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Hastings Technology
The main advantage of trading using opposite Waste Management and Hastings Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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.| Waste Management vs. Apple Inc | Waste Management vs. Apple Inc | Waste Management vs. Apple Inc | Waste Management vs. Apple Inc |
| Hastings Technology vs. CEOTRONICS | Hastings Technology vs. Cleanaway Waste Management | Hastings Technology vs. Sims Metal Management | Hastings Technology vs. Waste Management |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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