Correlation Between Hurco Companies and Enpro Industries

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

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

Diversification Opportunities for Hurco Companies and Enpro Industries

-0.06

Correlation Coefficient

Hurco Companies  Enpro Industries

Good diversification

The 3 months correlation between Hurco and Enpro is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hurco Companies and Enpro Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enpro Industries and Hurco Companies 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 Hurco Companies are associated (or correlated) with Enpro Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enpro Industries has no effect on the direction of Hurco Companies i.e., Hurco Companies and Enpro Industries go up and down completely randomly.

Pair Corralation between Hurco Companies and Enpro Industries

Given the investment horizon of 90 days Hurco Companies is expected to under-perform the Enpro Industries. But the stock apears to be less risky and, when comparing its historical volatility, Hurco Companies is 1.02 times less risky than Enpro Industries. The stock trades about -0.03 of its potential returns per unit of risk. The Enpro Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,510  in Enpro Industries on February 3, 2024 and sell it today you would earn a total of  5,740  from holding Enpro Industries or generate 60.36% return on investment over 90 days.

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

Hurco Companies  vs.  Enpro Industries

Hurco Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hurco Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Enpro Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hurco Companies and Enpro Industries

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

The idea behind Hurco Companies and Enpro Industries 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.