Correlation Between H B and Core Molding

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

By analyzing existing cross correlation between H B Fuller and Core Molding Technologies, you can compare the effects of market volatilities on H B and Core Molding 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 H B with a short position of Core Molding. Check out your portfolio center. Please also check ongoing floating volatility patterns of H B and Core Molding.

Diversification Opportunities for H B and Core Molding

-0.33

Correlation Coefficient

H B  Core Molding

Very good diversification

The 3 months correlation between FUL and Core is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding H B Fuller and Core Molding Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Molding Technologies and H B 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 H B Fuller are associated (or correlated) with Core Molding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Molding Technologies has no effect on the direction of H B i.e., H B and Core Molding go up and down completely randomly.

Pair Corralation between H B and Core Molding

Considering the 90-day investment horizon H B Fuller is expected to under-perform the Core Molding. But the stock apears to be less risky and, when comparing its historical volatility, H B Fuller is 1.33 times less risky than Core Molding. The stock trades about -0.06 of its potential returns per unit of risk. The Core Molding Technologies is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,978  in Core Molding Technologies on February 18, 2025 and sell it today you would lose (418.00) from holding Core Molding Technologies or give up 21.13% of portfolio value over 90 days.

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

H B Fuller  vs.  Core Molding Technologies

H B Fuller

Risk-Adjusted Performance

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, H B is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Core Molding Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Core Molding Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Core Molding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with H B and Core Molding

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

The idea behind H B Fuller and Core Molding Technologies 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.