Correlation Between HWH International and Hanesbrands

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

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

Diversification Opportunities for HWH International and Hanesbrands

-0.47

Correlation Coefficient

HWH International  Hanesbrands

Very good diversification

The 3 months correlation between HWH and Hanesbrands is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding HWH International and Hanesbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanesbrands and HWH International 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 HWH International are associated (or correlated) with Hanesbrands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanesbrands has no effect on the direction of HWH International i.e., HWH International and Hanesbrands go up and down completely randomly.

Pair Corralation between HWH International and Hanesbrands

Considering the 90-day investment horizon HWH International is expected to generate 5.48 times more return on investment than Hanesbrands. However, HWH International is 5.48 times more volatile than Hanesbrands. It trades about 0.07 of its potential returns per unit of risk. Hanesbrands is currently generating about -0.11 per unit of risk. If you would invest  151.00  in HWH International on February 8, 2024 and sell it today you would lose (11.99) from holding HWH International or give up 7.94% of portfolio value over 90 days.

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

HWH International  vs.  Hanesbrands

HWH International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HWH International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, HWH International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Hanesbrands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanesbrands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Hanesbrands is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with HWH International and Hanesbrands

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

The idea behind HWH International and Hanesbrands 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.