Correlation Between HOKURIKU and EnviTec Biogas
Can any of the company-specific risk be diversified away by investing in both HOKURIKU and EnviTec Biogas 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 HOKURIKU and EnviTec Biogas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOKURIKU EL PWR and EnviTec Biogas AG, you can compare the effects of market volatilities on HOKURIKU and EnviTec Biogas 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 HOKURIKU with a short position of EnviTec Biogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOKURIKU and EnviTec Biogas.
Diversification Opportunities for HOKURIKU and EnviTec Biogas
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HOKURIKU and EnviTec is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding HOKURIKU EL PWR and EnviTec Biogas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnviTec Biogas AG and HOKURIKU 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 HOKURIKU EL PWR are associated (or correlated) with EnviTec Biogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnviTec Biogas AG has no effect on the direction of HOKURIKU i.e., HOKURIKU and EnviTec Biogas go up and down completely randomly.
Pair Corralation between HOKURIKU and EnviTec Biogas
Assuming the 90 days horizon HOKURIKU EL PWR is expected to under-perform the EnviTec Biogas. In addition to that, HOKURIKU is 1.07 times more volatile than EnviTec Biogas AG. It trades about -0.2 of its total potential returns per unit of risk. EnviTec Biogas AG is currently generating about 0.03 per unit of volatility. If you would invest 3,070 in EnviTec Biogas AG on September 12, 2024 and sell it today you would earn a total of 30.00 from holding EnviTec Biogas AG or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HOKURIKU EL PWR vs. EnviTec Biogas AG
Performance |
| Timeline |
| HOKURIKU EL PWR |
| EnviTec Biogas AG |
HOKURIKU and EnviTec Biogas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOKURIKU and EnviTec Biogas
The main advantage of trading using opposite HOKURIKU and EnviTec Biogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOKURIKU position performs unexpectedly, EnviTec Biogas 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 EnviTec Biogas will offset losses from the drop in EnviTec Biogas' long position.| HOKURIKU vs. Vulcan Materials | HOKURIKU vs. Ping An Insurance | HOKURIKU vs. Zurich Insurance Group | HOKURIKU vs. REVO INSURANCE SPA |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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