Can any of the company-specific risk be diversified away by investing in both HHG Capital and Associated Capital 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 HHG Capital and Associated Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HHG Capital Corp and Associated Capital Group, you can compare the effects of market volatilities on HHG Capital and Associated Capital 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 HHG Capital with a short position of Associated Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of HHG Capital and Associated Capital.
Diversification Opportunities for HHG Capital and Associated Capital
The 3 months correlation between HHG and Associated is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding HHG Capital Corp and Associated Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Capital and HHG Capital 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 HHG Capital Corp are associated (or correlated) with Associated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Capital has no effect on the direction of HHG Capital i.e., HHG Capital and Associated Capital go up and down completely randomly.
Pair Corralation between HHG Capital and Associated Capital
Assuming the 90 days horizon HHG Capital Corp is expected to generate 2.44 times more return on investment than Associated Capital. However, HHG Capital is 2.44 times more volatile than Associated Capital Group. It trades about 0.15 of its potential returns per unit of risk. Associated Capital Group is currently generating about 0.27 per unit of risk. If you would invest 1,140 in HHG Capital Corp on March 6, 2024 and sell it today you would earn a total of 107.00 from holding HHG Capital Corp or generate 9.39% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in HHG Capital Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, HHG Capital may actually be approaching a critical reversion point that can send shares even higher in July 2024.
Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Associated Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.