Correlation Between Crane and Helios Technologies

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

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

Diversification Opportunities for Crane and Helios Technologies

0.74

Correlation Coefficient

Crane  Helios Technologies

Poor diversification

The 3 months correlation between Crane and Helios is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Helios Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Technologies and Crane 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 Crane Company are associated (or correlated) with Helios Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Technologies has no effect on the direction of Crane i.e., Crane and Helios Technologies go up and down completely randomly.

Pair Corralation between Crane and Helios Technologies

Allowing for the 90-day total investment horizon Crane is expected to generate 1.38 times less return on investment than Helios Technologies. But when comparing it to its historical volatility, Crane Company is 1.71 times less risky than Helios Technologies. It trades about 0.2 of its potential returns per unit of risk. Helios Technologies is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,520  in Helios Technologies on March 2, 2024 and sell it today you would earn a total of  352.00  from holding Helios Technologies or generate 7.79% return on investment over 90 days.

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

Crane Company  vs.  Helios Technologies

Crane Company

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Crane reported solid returns over the last few months and may actually be approaching a breakup point.

Helios Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Helios Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Helios Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crane and Helios Technologies

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

The idea behind Crane Company and Helios 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.