Correlation Between ABERFORTH SMCOS and HEXAGON AB
Can any of the company-specific risk be diversified away by investing in both ABERFORTH SMCOS and HEXAGON AB 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 ABERFORTH SMCOS and HEXAGON AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABERFORTH SMCOS TRLS 01 and HEXAGON AB ADR1, you can compare the effects of market volatilities on ABERFORTH SMCOS and HEXAGON AB 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 ABERFORTH SMCOS with a short position of HEXAGON AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABERFORTH SMCOS and HEXAGON AB.
Diversification Opportunities for ABERFORTH SMCOS and HEXAGON AB
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ABERFORTH and HEXAGON is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ABERFORTH SMCOS TRLS 01 and HEXAGON AB ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXAGON AB ADR1 and ABERFORTH SMCOS 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 ABERFORTH SMCOS TRLS 01 are associated (or correlated) with HEXAGON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXAGON AB ADR1 has no effect on the direction of ABERFORTH SMCOS i.e., ABERFORTH SMCOS and HEXAGON AB go up and down completely randomly.
Pair Corralation between ABERFORTH SMCOS and HEXAGON AB
Assuming the 90 days horizon ABERFORTH SMCOS TRLS 01 is expected to generate 0.61 times more return on investment than HEXAGON AB. However, ABERFORTH SMCOS TRLS 01 is 1.65 times less risky than HEXAGON AB. It trades about -0.01 of its potential returns per unit of risk. HEXAGON AB ADR1 is currently generating about -0.08 per unit of risk. If you would invest 1,774 in ABERFORTH SMCOS TRLS 01 on September 3, 2024 and sell it today you would lose (34.00) from holding ABERFORTH SMCOS TRLS 01 or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABERFORTH SMCOS TRLS 01 vs. HEXAGON AB ADR1
Performance |
| Timeline |
| ABERFORTH SMCOS TRLS |
| HEXAGON AB ADR1 |
ABERFORTH SMCOS and HEXAGON AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABERFORTH SMCOS and HEXAGON AB
The main advantage of trading using opposite ABERFORTH SMCOS and HEXAGON AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABERFORTH SMCOS position performs unexpectedly, HEXAGON AB 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 HEXAGON AB will offset losses from the drop in HEXAGON AB's long position.| ABERFORTH SMCOS vs. VITEC SOFTWARE GROUP | ABERFORTH SMCOS vs. Check Point Software | ABERFORTH SMCOS vs. Axway Software SA | ABERFORTH SMCOS vs. Sqs Software Quality |
| HEXAGON AB vs. Japan Post Insurance | HEXAGON AB vs. PARKEN Sport Entertainment | HEXAGON AB vs. Air Transport Services | HEXAGON AB vs. USWE SPORTS AB |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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