Correlation Between ASSA ABLOY and Hexagon AB
Can any of the company-specific risk be diversified away by investing in both ASSA ABLOY 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 ASSA ABLOY and Hexagon AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASSA ABLOY AB and Hexagon AB, you can compare the effects of market volatilities on ASSA ABLOY 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 ASSA ABLOY with a short position of Hexagon AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSA ABLOY and Hexagon AB.
Diversification Opportunities for ASSA ABLOY and Hexagon AB
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASSA and Hexagon is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and Hexagon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon AB and ASSA ABLOY 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 ASSA ABLOY AB 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 has no effect on the direction of ASSA ABLOY i.e., ASSA ABLOY and Hexagon AB go up and down completely randomly.
Pair Corralation between ASSA ABLOY and Hexagon AB
Assuming the 90 days trading horizon ASSA ABLOY AB is expected to generate 0.79 times more return on investment than Hexagon AB. However, ASSA ABLOY AB is 1.26 times less risky than Hexagon AB. It trades about 0.07 of its potential returns per unit of risk. Hexagon AB is currently generating about -0.02 per unit of risk. If you would invest 22,776 in ASSA ABLOY AB on September 2, 2024 and sell it today you would earn a total of 10,714 from holding ASSA ABLOY AB or generate 47.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASSA ABLOY AB vs. Hexagon AB
Performance |
| Timeline |
| ASSA ABLOY AB |
| Hexagon AB |
ASSA ABLOY and Hexagon AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASSA ABLOY and Hexagon AB
The main advantage of trading using opposite ASSA ABLOY and Hexagon AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSA ABLOY 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.| ASSA ABLOY vs. Atlas Copco AB | ASSA ABLOY vs. Sandvik AB | ASSA ABLOY vs. Alfa Laval AB | ASSA ABLOY vs. AB SKF |
| Hexagon AB vs. Impact Coatings publ | Hexagon AB vs. Catella AB | Hexagon AB vs. Lidds AB | Hexagon AB vs. CellaVision 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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