Correlation Between HH International and SP Group
Can any of the company-specific risk be diversified away by investing in both HH International and SP Group 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 HH International and SP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HH International AS and SP Group AS, you can compare the effects of market volatilities on HH International and SP Group 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 HH International with a short position of SP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of HH International and SP Group.
Diversification Opportunities for HH International and SP Group
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HH International and SPG is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding HH International AS and SP Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Group AS and HH International 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 HH International AS are associated (or correlated) with SP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Group AS has no effect on the direction of HH International i.e., HH International and SP Group go up and down completely randomly.
Pair Corralation between HH International and SP Group
Assuming the 90 days horizon HH International AS is expected to generate 1.2 times more return on investment than SP Group. However, HH International is 1.2 times more volatile than SP Group AS. It trades about -0.06 of its potential returns per unit of risk. SP Group AS is currently generating about -0.11 per unit of risk. If you would invest 7,640 in HH International AS on October 26, 2024 and sell it today you would lose (210.00) from holding HH International AS or give up 2.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HH International AS vs. SP Group AS
Performance |
| Timeline |
| HH International |
| SP Group AS |
HH International and SP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HH International and SP Group
The main advantage of trading using opposite HH International and SP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HH International position performs unexpectedly, SP Group 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 SP Group will offset losses from the drop in SP Group's long position.| HH International vs. ROCKWOOL International AS | HH International vs. Per Aarsleff Holding | HH International vs. Matas AS | HH International vs. DFDS AS |
| SP Group vs. Schouw Co | SP Group vs. Per Aarsleff Holding | SP Group vs. HH International AS | SP Group vs. DFDS AS |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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