Correlation Between Air Canada and HEXAGON AB
Can any of the company-specific risk be diversified away by investing in both Air Canada 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 Air Canada and HEXAGON AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and HEXAGON AB ADR1, you can compare the effects of market volatilities on Air Canada 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 Air Canada with a short position of HEXAGON AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and HEXAGON AB.
Diversification Opportunities for Air Canada and HEXAGON AB
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and HEXAGON is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada 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 Air Canada 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 Air Canada 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 Air Canada i.e., Air Canada and HEXAGON AB go up and down completely randomly.
Pair Corralation between Air Canada and HEXAGON AB
Assuming the 90 days trading horizon Air Canada is expected to under-perform the HEXAGON AB. But the stock apears to be less risky and, when comparing its historical volatility, Air Canada is 1.19 times less risky than HEXAGON AB. The stock trades about -0.36 of its potential returns per unit of risk. The HEXAGON AB ADR1 is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 910.00 in HEXAGON AB ADR1 on November 2, 2024 and sell it today you would earn a total of 110.00 from holding HEXAGON AB ADR1 or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Air Canada vs. HEXAGON AB ADR1
Performance |
| Timeline |
| Air Canada |
| HEXAGON AB ADR1 |
Air Canada and HEXAGON AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and HEXAGON AB
The main advantage of trading using opposite Air Canada and HEXAGON AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada 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.| Air Canada vs. Nordic Semiconductor ASA | Air Canada vs. Silicon Motion Technology | Air Canada vs. Elmos Semiconductor SE | Air Canada vs. Mitsui Chemicals |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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