Correlation Between Constellation Software and Hastings Technology
Can any of the company-specific risk be diversified away by investing in both Constellation Software 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 Constellation Software and Hastings Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Software and Hastings Technology Metals, you can compare the effects of market volatilities on Constellation Software 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 Constellation Software with a short position of Hastings Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Software and Hastings Technology.
Diversification Opportunities for Constellation Software and Hastings Technology
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Constellation and Hastings is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and Hastings Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hastings Technology and Constellation Software 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 Constellation Software 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 Constellation Software i.e., Constellation Software and Hastings Technology go up and down completely randomly.
Pair Corralation between Constellation Software and Hastings Technology
Assuming the 90 days trading horizon Constellation Software is expected to generate 0.49 times more return on investment than Hastings Technology. However, Constellation Software is 2.05 times less risky than Hastings Technology. It trades about 0.15 of its potential returns per unit of risk. Hastings Technology Metals is currently generating about -0.05 per unit of risk. If you would invest 303,000 in Constellation Software on November 3, 2024 and sell it today you would earn a total of 16,500 from holding Constellation Software or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Software vs. Hastings Technology Metals
Performance |
| Timeline |
| Constellation Software |
| Hastings Technology |
Constellation Software and Hastings Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Software and Hastings Technology
The main advantage of trading using opposite Constellation Software and Hastings Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Software 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.| Constellation Software vs. Chunghwa Telecom Co | Constellation Software vs. Verizon Communications | Constellation Software vs. CLOVER HEALTH INV | Constellation Software vs. Waste Management |
| Hastings Technology vs. BHP Group Limited | Hastings Technology vs. Rio Tinto Group | Hastings Technology vs. Vale SA | Hastings Technology vs. Vale SA |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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