Correlation Between Hexagon AB and RVRC Holding
Can any of the company-specific risk be diversified away by investing in both Hexagon AB and RVRC Holding 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 RVRC Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexagon AB and RVRC Holding AB, you can compare the effects of market volatilities on Hexagon AB and RVRC Holding 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 RVRC Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexagon AB and RVRC Holding.
Diversification Opportunities for Hexagon AB and RVRC Holding
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hexagon and RVRC is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hexagon AB and RVRC Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RVRC Holding 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 RVRC Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RVRC Holding AB has no effect on the direction of Hexagon AB i.e., Hexagon AB and RVRC Holding go up and down completely randomly.
Pair Corralation between Hexagon AB and RVRC Holding
Assuming the 90 days trading horizon Hexagon AB is expected to generate 0.48 times more return on investment than RVRC Holding. However, Hexagon AB is 2.1 times less risky than RVRC Holding. It trades about -0.37 of its potential returns per unit of risk. RVRC Holding AB is currently generating about -0.18 per unit of risk. If you would invest 10,850 in Hexagon AB on August 29, 2024 and sell it today you would lose (1,640) from holding Hexagon AB or give up 15.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexagon AB vs. RVRC Holding AB
Performance |
| Timeline |
| Hexagon AB |
| RVRC Holding AB |
Hexagon AB and RVRC Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexagon AB and RVRC Holding
The main advantage of trading using opposite Hexagon AB and RVRC Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexagon AB position performs unexpectedly, RVRC Holding 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 RVRC Holding will offset losses from the drop in RVRC Holding's long position.| Hexagon AB vs. Integrum AB Series | Hexagon AB vs. Concejo AB | Hexagon AB vs. Diadrom Holding AB | Hexagon AB vs. Greater Than 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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