Correlation Between Hexagon Composites and Nel ASA
Can any of the company-specific risk be diversified away by investing in both Hexagon Composites and Nel ASA 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 Hexagon Composites and Nel ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexagon Composites ASA and Nel ASA, you can compare the effects of market volatilities on Hexagon Composites and Nel ASA 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 Hexagon Composites with a short position of Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexagon Composites and Nel ASA.
Diversification Opportunities for Hexagon Composites and Nel ASA
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hexagon and Nel is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hexagon Composites ASA and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA and Hexagon Composites 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 Hexagon Composites ASA are associated (or correlated) with Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Hexagon Composites i.e., Hexagon Composites and Nel ASA go up and down completely randomly.
Pair Corralation between Hexagon Composites and Nel ASA
Assuming the 90 days trading horizon Hexagon Composites ASA is expected to under-perform the Nel ASA. But the stock apears to be less risky and, when comparing its historical volatility, Hexagon Composites ASA is 2.18 times less risky than Nel ASA. The stock trades about -0.22 of its potential returns per unit of risk. The Nel ASA is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 286.00 in Nel ASA on November 4, 2024 and sell it today you would lose (48.00) from holding Nel ASA or give up 16.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexagon Composites ASA vs. Nel ASA
Performance |
| Timeline |
| Hexagon Composites ASA |
| Nel ASA |
Hexagon Composites and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexagon Composites and Nel ASA
The main advantage of trading using opposite Hexagon Composites and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexagon Composites position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA's long position.| Hexagon Composites vs. Hexagon Purus As | Hexagon Composites vs. Nel ASA | Hexagon Composites vs. Powercell Sweden | Hexagon Composites vs. Scatec Solar OL |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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