Correlation Between Techtronic Industries and Hillman Solutions

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

By analyzing existing cross correlation between Techtronic Industries Ltd and Hillman Solutions Corp, you can compare the effects of market volatilities on Techtronic Industries and Hillman Solutions 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 Techtronic Industries with a short position of Hillman Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techtronic Industries and Hillman Solutions.

Diversification Opportunities for Techtronic Industries and Hillman Solutions

0.76

Correlation Coefficient

Techtronic Industries  Hillman Solutions

Poor diversification

The 3 months correlation between Techtronic and Hillman is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Techtronic Industries Ltd and Hillman Solutions Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillman Solutions Corp and Techtronic Industries 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 Techtronic Industries Ltd are associated (or correlated) with Hillman Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillman Solutions Corp has no effect on the direction of Techtronic Industries i.e., Techtronic Industries and Hillman Solutions go up and down completely randomly.

Pair Corralation between Techtronic Industries and Hillman Solutions

Assuming the 90 days horizon Techtronic Industries Ltd is expected to generate 0.81 times more return on investment than Hillman Solutions. However, Techtronic Industries Ltd is 1.23 times less risky than Hillman Solutions. It trades about 0.2 of its potential returns per unit of risk. Hillman Solutions Corp is currently generating about 0.15 per unit of risk. If you would invest  5,871  in Techtronic Industries Ltd on June 24, 2024 and sell it today you would earn a total of  1,564  from holding Techtronic Industries Ltd or generate 26.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Techtronic Industries Ltd  vs.  Hillman Solutions Corp

Techtronic Industries

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Techtronic Industries Ltd are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Techtronic Industries showed solid returns over the last few months and may actually be approaching a breakup point.

Hillman Solutions Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hillman Solutions Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Hillman Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Techtronic Industries and Hillman Solutions

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

The idea behind Techtronic Industries Ltd and Hillman Solutions Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.