Correlation Between Haynes International and Proto Labs

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

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

Diversification Opportunities for Haynes International and Proto Labs

-0.47

Correlation Coefficient

Haynes International  Proto Labs

Very good diversification

The 3 months correlation between Haynes and Proto is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Haynes International and Proto Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proto Labs and Haynes International 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 Haynes International are associated (or correlated) with Proto Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proto Labs has no effect on the direction of Haynes International i.e., Haynes International and Proto Labs go up and down completely randomly.

Pair Corralation between Haynes International and Proto Labs

Given the investment horizon of 90 days Haynes International is expected to generate 0.14 times more return on investment than Proto Labs. However, Haynes International is 7.03 times less risky than Proto Labs. It trades about 0.13 of its potential returns per unit of risk. Proto Labs is currently generating about -0.27 per unit of risk. If you would invest  5,998  in Haynes International on January 20, 2024 and sell it today you would earn a total of  37.00  from holding Haynes International or generate 0.62% return on investment over 90 days.

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

Haynes International  vs.  Proto Labs

Haynes International

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Haynes International are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Haynes International displayed solid returns over the last few months and may actually be approaching a breakup point.

Proto Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Proto Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Haynes International and Proto Labs

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

The idea behind Haynes International and Proto Labs 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.