Correlation Between Shell PLC and HAL Trust

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

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

Diversification Opportunities for Shell PLC and HAL Trust

0.75

Correlation Coefficient

Shell PLC  HAL Trust

Poor diversification

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

Pair Corralation between Shell PLC and HAL Trust

Assuming the 90 days trading horizon Shell PLC is expected to generate 1.1 times less return on investment than HAL Trust. In addition to that, Shell PLC is 1.4 times more volatile than HAL Trust. It trades about 0.13 of its total potential returns per unit of risk. HAL Trust is currently generating about 0.2 per unit of volatility. If you would invest  11,305  in HAL Trust on April 30, 2025 and sell it today you would earn a total of  1,175  from holding HAL Trust or generate 10.39% return on investment over 90 days.

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

Shell PLC  vs.  HAL Trust

Shell PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shell PLC are ranked lower than 10 (%) 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.

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.

Pair Trading with Shell PLC and HAL Trust

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

The idea behind Shell PLC and HAL Trust 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.