Correlation Between AstraZeneca PLC and Hexagon AB
Can any of the company-specific risk be diversified away by investing in both AstraZeneca PLC 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 AstraZeneca PLC and Hexagon AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AstraZeneca PLC and Hexagon AB, you can compare the effects of market volatilities on AstraZeneca PLC 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 AstraZeneca PLC with a short position of Hexagon AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and Hexagon AB.
Diversification Opportunities for AstraZeneca PLC and Hexagon AB
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AstraZeneca and Hexagon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and Hexagon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon AB and AstraZeneca PLC 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 AstraZeneca PLC 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 AstraZeneca PLC i.e., AstraZeneca PLC and Hexagon AB go up and down completely randomly.
Pair Corralation between AstraZeneca PLC and Hexagon AB
Assuming the 90 days trading horizon AstraZeneca PLC is expected to generate 1.14 times more return on investment than Hexagon AB. However, AstraZeneca PLC is 1.14 times more volatile than Hexagon AB. It trades about -0.19 of its potential returns per unit of risk. Hexagon AB is currently generating about -0.37 per unit of risk. If you would invest 160,600 in AstraZeneca PLC on August 29, 2024 and sell it today you would lose (15,200) from holding AstraZeneca PLC or give up 9.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AstraZeneca PLC vs. Hexagon AB
Performance |
| Timeline |
| AstraZeneca PLC |
| Hexagon AB |
AstraZeneca PLC and Hexagon AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AstraZeneca PLC and Hexagon AB
The main advantage of trading using opposite AstraZeneca PLC and Hexagon AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstraZeneca PLC 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.| AstraZeneca PLC vs. AB Volvo | AstraZeneca PLC vs. Telefonaktiebolaget LM Ericsson | AstraZeneca PLC vs. H M Hennes | AstraZeneca PLC vs. Investor AB ser |
| Hexagon AB vs. Integrum AB Series | Hexagon AB vs. Concejo AB | Hexagon AB vs. Diadrom Holding AB | Hexagon AB vs. Greater Than 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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