Correlation Between ECIT AS and Hexagon Purus
Can any of the company-specific risk be diversified away by investing in both ECIT AS and Hexagon Purus 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 ECIT AS and Hexagon Purus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECIT AS and Hexagon Purus As, you can compare the effects of market volatilities on ECIT AS and Hexagon Purus 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 ECIT AS with a short position of Hexagon Purus. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECIT AS and Hexagon Purus.
Diversification Opportunities for ECIT AS and Hexagon Purus
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between ECIT and Hexagon is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ECIT AS and Hexagon Purus As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon Purus As and ECIT AS 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 ECIT AS are associated (or correlated) with Hexagon Purus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon Purus As has no effect on the direction of ECIT AS i.e., ECIT AS and Hexagon Purus go up and down completely randomly.
Pair Corralation between ECIT AS and Hexagon Purus
Assuming the 90 days trading horizon ECIT AS is expected to under-perform the Hexagon Purus. But the stock apears to be less risky and, when comparing its historical volatility, ECIT AS is 12.68 times less risky than Hexagon Purus. The stock trades about -0.29 of its potential returns per unit of risk. The Hexagon Purus As is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 537.00 in Hexagon Purus As on September 13, 2024 and sell it today you would earn a total of 38.00 from holding Hexagon Purus As or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 54.55% |
| Values | Daily Returns |
ECIT AS vs. Hexagon Purus As
Performance |
| Timeline |
| ECIT AS |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hexagon Purus As |
ECIT AS and Hexagon Purus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECIT AS and Hexagon Purus
The main advantage of trading using opposite ECIT AS and Hexagon Purus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECIT AS position performs unexpectedly, Hexagon Purus 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 Purus will offset losses from the drop in Hexagon Purus' long position.The idea behind ECIT AS and Hexagon Purus As pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hexagon Purus vs. Scana ASA | Hexagon Purus vs. Elkem ASA | Hexagon Purus vs. Integrated Wind Solutions | Hexagon Purus vs. Vow ASA |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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