Correlation Between Edesa Holding and Halliburton

Can any of the company-specific risk be diversified away by investing in both Edesa Holding and Halliburton 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 Edesa Holding and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Edesa Holding SA and Halliburton Co, you can compare the effects of market volatilities on Edesa Holding and Halliburton 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 Edesa Holding with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edesa Holding and Halliburton.

Diversification Opportunities for Edesa Holding and Halliburton

0.0

Correlation Coefficient

Edesa Holding  Halliburton

Pay attention - limited upside

The 3 months correlation between Edesa and Halliburton is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Edesa Holding SA and Halliburton Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Edesa Holding 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 Edesa Holding SA are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Edesa Holding i.e., Edesa Holding and Halliburton go up and down completely randomly.

Pair Corralation between Edesa Holding and Halliburton

Assuming the 90 days trading horizon Edesa Holding is expected to generate 8.05 times less return on investment than Halliburton. But when comparing it to its historical volatility, Edesa Holding SA is 5.49 times less risky than Halliburton. It trades about 0.02 of its potential returns per unit of risk. Halliburton Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,655,371  in Halliburton Co on June 23, 2024 and sell it today you would earn a total of  152,129  from holding Halliburton Co or generate 9.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Edesa Holding SA  vs.  Halliburton Co

Edesa Holding SA

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Edesa Holding SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Edesa Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Halliburton

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Halliburton Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in October 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Edesa Holding and Halliburton

The main advantage of trading using opposite Edesa Holding and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edesa Holding position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.

The idea behind Edesa Holding SA and Halliburton Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.