Correlation Between Hexagon AB and Impact Coatings
Can any of the company-specific risk be diversified away by investing in both Hexagon AB and Impact Coatings 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 Impact Coatings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexagon AB and Impact Coatings publ, you can compare the effects of market volatilities on Hexagon AB and Impact Coatings 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 Impact Coatings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexagon AB and Impact Coatings.
Diversification Opportunities for Hexagon AB and Impact Coatings
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hexagon and Impact is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hexagon AB and Impact Coatings publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact Coatings publ 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 Impact Coatings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact Coatings publ has no effect on the direction of Hexagon AB i.e., Hexagon AB and Impact Coatings go up and down completely randomly.
Pair Corralation between Hexagon AB and Impact Coatings
Assuming the 90 days trading horizon Hexagon AB is expected to generate 0.49 times more return on investment than Impact Coatings. However, Hexagon AB is 2.02 times less risky than Impact Coatings. It trades about -0.24 of its potential returns per unit of risk. Impact Coatings publ is currently generating about -0.14 per unit of risk. If you would invest 10,165 in Hexagon AB on September 2, 2024 and sell it today you would lose (871.00) from holding Hexagon AB or give up 8.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexagon AB vs. Impact Coatings publ
Performance |
| Timeline |
| Hexagon AB |
| Impact Coatings publ |
Hexagon AB and Impact Coatings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexagon AB and Impact Coatings
The main advantage of trading using opposite Hexagon AB and Impact Coatings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexagon AB position performs unexpectedly, Impact Coatings 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 Impact Coatings will offset losses from the drop in Impact Coatings' long position.| Hexagon AB vs. Impact Coatings publ | Hexagon AB vs. Catella AB | Hexagon AB vs. Lidds AB | Hexagon AB vs. CellaVision AB |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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