Correlation Between Axfood AB and HEXPOL AB
Can any of the company-specific risk be diversified away by investing in both Axfood AB and HEXPOL 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 Axfood AB and HEXPOL AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and HEXPOL AB, you can compare the effects of market volatilities on Axfood AB and HEXPOL 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 Axfood AB with a short position of HEXPOL AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and HEXPOL AB.
Diversification Opportunities for Axfood AB and HEXPOL AB
Average diversification
The 3 months correlation between Axfood and HEXPOL is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and HEXPOL AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXPOL AB and Axfood AB 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 Axfood AB are associated (or correlated) with HEXPOL AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXPOL AB has no effect on the direction of Axfood AB i.e., Axfood AB and HEXPOL AB go up and down completely randomly.
Pair Corralation between Axfood AB and HEXPOL AB
Assuming the 90 days trading horizon Axfood AB is expected to under-perform the HEXPOL AB. But the stock apears to be less risky and, when comparing its historical volatility, Axfood AB is 1.28 times less risky than HEXPOL AB. The stock trades about -0.06 of its potential returns per unit of risk. The HEXPOL AB is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 10,550 in HEXPOL AB on August 29, 2024 and sell it today you would lose (130.00) from holding HEXPOL AB or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axfood AB vs. HEXPOL AB
Performance |
| Timeline |
| Axfood AB |
| HEXPOL AB |
Axfood AB and HEXPOL AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and HEXPOL AB
The main advantage of trading using opposite Axfood AB and HEXPOL AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, HEXPOL 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 HEXPOL AB will offset losses from the drop in HEXPOL AB's long position.| Axfood AB vs. Castellum AB | Axfood AB vs. Tele2 AB | Axfood AB vs. Investor AB ser | Axfood AB vs. Kinnevik Investment 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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