Correlation Between Hardide PLC and London Security
Can any of the company-specific risk be diversified away by investing in both Hardide PLC and London Security 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 Hardide PLC and London Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hardide PLC and London Security Plc, you can compare the effects of market volatilities on Hardide PLC and London Security 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 Hardide PLC with a short position of London Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hardide PLC and London Security.
Diversification Opportunities for Hardide PLC and London Security
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hardide and London is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hardide PLC and London Security Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Security Plc and Hardide 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 Hardide PLC are associated (or correlated) with London Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Security Plc has no effect on the direction of Hardide PLC i.e., Hardide PLC and London Security go up and down completely randomly.
Pair Corralation between Hardide PLC and London Security
Assuming the 90 days trading horizon Hardide PLC is expected to generate 6.98 times more return on investment than London Security. However, Hardide PLC is 6.98 times more volatile than London Security Plc. It trades about 0.21 of its potential returns per unit of risk. London Security Plc is currently generating about 0.22 per unit of risk. If you would invest 435.00 in Hardide PLC on September 24, 2024 and sell it today you would earn a total of 128.00 from holding Hardide PLC or generate 29.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hardide PLC vs. London Security Plc
Performance |
| Timeline |
| Hardide PLC |
| London Security Plc |
Hardide PLC and London Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hardide PLC and London Security
The main advantage of trading using opposite Hardide PLC and London Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hardide PLC position performs unexpectedly, London Security 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 London Security will offset losses from the drop in London Security's long position.| Hardide PLC vs. Givaudan SA | Hardide PLC vs. Antofagasta PLC | Hardide PLC vs. Ferrexpo PLC | Hardide PLC vs. Atalaya Mining |
| London Security vs. Tungsten West PLC | London Security vs. Argo Group Limited | London Security vs. Hardide PLC | London Security vs. Gfinity PLC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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