Correlation Between All For and Hanover House

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

By analyzing existing cross correlation between All For One and Hanover House, you can compare the effects of market volatilities on All For and Hanover House 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 All For with a short position of Hanover House. Check out your portfolio center. Please also check ongoing floating volatility patterns of All For and Hanover House.

Diversification Opportunities for All For and Hanover House

-0.06

Correlation Coefficient

All For  Hanover House

Good diversification

The 3 months correlation between All and Hanover is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding All For One and Hanover House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover House and All For 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 All For One are associated (or correlated) with Hanover House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover House has no effect on the direction of All For i.e., All For and Hanover House go up and down completely randomly.

Pair Corralation between All For and Hanover House

Given the investment horizon of 90 days All For One is expected to generate 19.24 times more return on investment than Hanover House. However, All For is 19.24 times more volatile than Hanover House. It trades about 0.22 of its potential returns per unit of risk. Hanover House is currently generating about 0.06 per unit of risk. If you would invest  29.00  in All For One on March 19, 2024 and sell it today you would lose (28.99) from holding All For One or give up 99.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.54%
Values	Daily Returns

All For One  vs.  Hanover House

All For One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days All For One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, All For is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Hanover House

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hanover House are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Hanover House exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with All For and Hanover House

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

The idea behind All For One and Hanover House 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 Transaction History module to view history of all your transactions and understand their impact on performance.