Correlation Between CVD Equipment and Hurco Companies

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

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

Diversification Opportunities for CVD Equipment and Hurco Companies

-0.82

Correlation Coefficient

CVD Equipment  Hurco Companies

Pay attention - limited upside

The 3 months correlation between CVD and Hurco is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding CVD Equipment and Hurco Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurco Companies and CVD Equipment 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 CVD Equipment are associated (or correlated) with Hurco Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurco Companies has no effect on the direction of CVD Equipment i.e., CVD Equipment and Hurco Companies go up and down completely randomly.

Pair Corralation between CVD Equipment and Hurco Companies

Considering the 90-day investment horizon CVD Equipment is expected to under-perform the Hurco Companies. In addition to that, CVD Equipment is 1.19 times more volatile than Hurco Companies. It trades about -0.21 of its total potential returns per unit of risk. Hurco Companies is currently generating about 0.1 per unit of volatility. If you would invest  2,142  in Hurco Companies on August 14, 2024 and sell it today you would earn a total of  76.00  from holding Hurco Companies or generate 3.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

CVD Equipment  vs.  Hurco Companies

CVD Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVD Equipment 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 fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Hurco Companies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hurco Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Hurco Companies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVD Equipment and Hurco Companies

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

The idea behind CVD Equipment and Hurco Companies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.