Correlation Between Hanza AB and Alcadon Group
Can any of the company-specific risk be diversified away by investing in both Hanza AB and Alcadon Group 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 Hanza AB and Alcadon Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanza AB and Alcadon Group AB, you can compare the effects of market volatilities on Hanza AB and Alcadon Group 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 Hanza AB with a short position of Alcadon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanza AB and Alcadon Group.
Diversification Opportunities for Hanza AB and Alcadon Group
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hanza and Alcadon is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hanza AB and Alcadon Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcadon Group AB and Hanza 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 Hanza AB are associated (or correlated) with Alcadon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcadon Group AB has no effect on the direction of Hanza AB i.e., Hanza AB and Alcadon Group go up and down completely randomly.
Pair Corralation between Hanza AB and Alcadon Group
Assuming the 90 days trading horizon Hanza AB is expected to generate 0.89 times more return on investment than Alcadon Group. However, Hanza AB is 1.13 times less risky than Alcadon Group. It trades about 0.22 of its potential returns per unit of risk. Alcadon Group AB is currently generating about -0.27 per unit of risk. If you would invest 5,700 in Hanza AB on August 25, 2024 and sell it today you would earn a total of 1,105 from holding Hanza AB or generate 19.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanza AB vs. Alcadon Group AB
Performance |
| Timeline |
| Hanza AB |
| Alcadon Group AB |
Hanza AB and Alcadon Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanza AB and Alcadon Group
The main advantage of trading using opposite Hanza AB and Alcadon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanza AB position performs unexpectedly, Alcadon Group 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 Alcadon Group will offset losses from the drop in Alcadon Group's long position.| Hanza AB vs. Divio Technologies AB | Hanza AB vs. XMReality AB | Hanza AB vs. KABE Group AB | Hanza AB vs. IAR Systems Group |
| Alcadon Group vs. New Wave Group | Alcadon Group vs. Cantargia AB | Alcadon Group vs. Enea AB | Alcadon Group vs. Proact IT Group |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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