Correlation Between H2O Retailing and GOODTECH ASA
Can any of the company-specific risk be diversified away by investing in both H2O Retailing and GOODTECH 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 H2O Retailing and GOODTECH ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and GOODTECH ASA A, you can compare the effects of market volatilities on H2O Retailing and GOODTECH 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 H2O Retailing with a short position of GOODTECH ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and GOODTECH ASA.
Diversification Opportunities for H2O Retailing and GOODTECH ASA
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between H2O and GOODTECH is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and GOODTECH ASA A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODTECH ASA A and H2O Retailing 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 H2O Retailing are associated (or correlated) with GOODTECH ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODTECH ASA A has no effect on the direction of H2O Retailing i.e., H2O Retailing and GOODTECH ASA go up and down completely randomly.
Pair Corralation between H2O Retailing and GOODTECH ASA
Assuming the 90 days horizon H2O Retailing is expected to generate 2.35 times less return on investment than GOODTECH ASA. But when comparing it to its historical volatility, H2O Retailing is 1.01 times less risky than GOODTECH ASA. It trades about 0.03 of its potential returns per unit of risk. GOODTECH ASA A is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 86.00 in GOODTECH ASA A on October 22, 2024 and sell it today you would earn a total of 2.00 from holding GOODTECH ASA A or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
H2O Retailing vs. GOODTECH ASA A
Performance |
| Timeline |
| H2O Retailing |
| GOODTECH ASA A |
H2O Retailing and GOODTECH ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and GOODTECH ASA
The main advantage of trading using opposite H2O Retailing and GOODTECH ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing position performs unexpectedly, GOODTECH 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 GOODTECH ASA will offset losses from the drop in GOODTECH ASA's long position.| H2O Retailing vs. Vulcan Materials | H2O Retailing vs. Summit Materials | H2O Retailing vs. Japan Tobacco | H2O Retailing vs. SANOK RUBBER ZY |
| GOODTECH ASA vs. FAST RETAIL ADR | GOODTECH ASA vs. H2O Retailing | GOODTECH ASA vs. AIR PRODCHEMICALS | GOODTECH ASA vs. Ultra Clean Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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