Correlation Between Hexagon AB and CDON AB
Can any of the company-specific risk be diversified away by investing in both Hexagon AB and CDON 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 Hexagon AB and CDON AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexagon AB and CDON AB, you can compare the effects of market volatilities on Hexagon AB and CDON 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 Hexagon AB with a short position of CDON AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexagon AB and CDON AB.
Diversification Opportunities for Hexagon AB and CDON AB
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hexagon and CDON is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hexagon AB and CDON AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDON AB and Hexagon 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 Hexagon AB are associated (or correlated) with CDON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDON AB has no effect on the direction of Hexagon AB i.e., Hexagon AB and CDON AB go up and down completely randomly.
Pair Corralation between Hexagon AB and CDON AB
Assuming the 90 days trading horizon Hexagon AB is expected to under-perform the CDON AB. But the stock apears to be less risky and, when comparing its historical volatility, Hexagon AB is 2.49 times less risky than CDON AB. The stock trades about -0.03 of its potential returns per unit of risk. The CDON AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 16,380 in CDON AB on September 3, 2024 and sell it today you would lose (6,760) from holding CDON AB or give up 41.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexagon AB vs. CDON AB
Performance |
| Timeline |
| Hexagon AB |
| CDON AB |
Hexagon AB and CDON AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexagon AB and CDON AB
The main advantage of trading using opposite Hexagon AB and CDON AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexagon AB position performs unexpectedly, CDON 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 CDON AB will offset losses from the drop in CDON AB's long position.| Hexagon AB vs. ASSA ABLOY AB | Hexagon AB vs. Sandvik AB | Hexagon AB vs. Investor AB ser | Hexagon AB vs. NIBE Industrier 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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