Correlation Between Hamilton Beach and Emerson Radio

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Can any of the company-specific risk be diversified away by investing in both Hamilton Beach and Emerson Radio 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 Hamilton Beach and Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hamilton Beach Brands and Emerson Radio, you can compare the effects of market volatilities on Hamilton Beach and Emerson Radio 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 Hamilton Beach with a short position of Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Beach and Emerson Radio.

Diversification Opportunities for Hamilton Beach and Emerson Radio

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Hamilton and Emerson is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Beach Brands and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio and Hamilton Beach 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 Hamilton Beach Brands are associated (or correlated) with Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Hamilton Beach i.e., Hamilton Beach and Emerson Radio go up and down completely randomly.

Pair Corralation between Hamilton Beach and Emerson Radio

Considering the 90-day investment horizon Hamilton Beach Brands is expected to generate 1.15 times more return on investment than Emerson Radio. However, Hamilton Beach is 1.15 times more volatile than Emerson Radio. It trades about 0.14 of its potential returns per unit of risk. Emerson Radio is currently generating about 0.01 per unit of risk. If you would invest  975.00  in Hamilton Beach Brands on December 30, 2023 and sell it today you would earn a total of  1,461  from holding Hamilton Beach Brands or generate 149.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hamilton Beach Brands  vs.  Emerson Radio

 Performance 
       Timeline  
Hamilton Beach Brands 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Beach Brands are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Hamilton Beach sustained solid returns over the last few months and may actually be approaching a breakup point.
Emerson Radio 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Emerson Radio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Emerson Radio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Hamilton Beach and Emerson Radio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hamilton Beach and Emerson Radio

The main advantage of trading using opposite Hamilton Beach and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton Beach position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.
The idea behind Hamilton Beach Brands and Emerson Radio 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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