Correlation Between HAL Trust and Shell PLC

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

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

Diversification Opportunities for HAL Trust and Shell PLC

0.75

Correlation Coefficient

HAL Trust  Shell PLC

Poor diversification

The 3 months correlation between HAL and Shell is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding HAL Trust and Shell PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell PLC and HAL Trust 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 HAL Trust are associated (or correlated) with Shell PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell PLC has no effect on the direction of HAL Trust i.e., HAL Trust and Shell PLC go up and down completely randomly.

Pair Corralation between HAL Trust and Shell PLC

Assuming the 90 days trading horizon HAL Trust is expected to generate 0.72 times more return on investment than Shell PLC. However, HAL Trust is 1.39 times less risky than Shell PLC. It trades about 0.19 of its potential returns per unit of risk. Shell PLC is currently generating about 0.1 per unit of risk. If you would invest  11,305  in HAL Trust on April 28, 2025 and sell it today you would earn a total of  1,155  from holding HAL Trust or generate 10.22% return on investment over 90 days.

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

HAL Trust  vs.  Shell PLC

HAL Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HAL Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, HAL Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Shell PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shell PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Shell PLC may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with HAL Trust and Shell PLC

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

The idea behind HAL Trust and Shell PLC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.