Correlation Between Halma Plc and Tomra Systems
Can any of the company-specific risk be diversified away by investing in both Halma Plc and Tomra Systems 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 Halma Plc and Tomra Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halma plc and Tomra Systems ASA, you can compare the effects of market volatilities on Halma Plc and Tomra Systems 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 Halma Plc with a short position of Tomra Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halma Plc and Tomra Systems.
Diversification Opportunities for Halma Plc and Tomra Systems
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Halma and Tomra is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Halma plc and Tomra Systems ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomra Systems ASA and Halma Plc 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 Halma plc are associated (or correlated) with Tomra Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomra Systems ASA has no effect on the direction of Halma Plc i.e., Halma Plc and Tomra Systems go up and down completely randomly.
Pair Corralation between Halma Plc and Tomra Systems
Assuming the 90 days horizon Halma plc is expected to generate 1.41 times more return on investment than Tomra Systems. However, Halma Plc is 1.41 times more volatile than Tomra Systems ASA. It trades about 0.08 of its potential returns per unit of risk. Tomra Systems ASA is currently generating about -0.33 per unit of risk. If you would invest 3,332 in Halma plc on August 29, 2024 and sell it today you would earn a total of 83.00 from holding Halma plc or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Halma plc vs. Tomra Systems ASA
Performance |
| Timeline |
| Halma plc |
| Tomra Systems ASA |
Halma Plc and Tomra Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halma Plc and Tomra Systems
The main advantage of trading using opposite Halma Plc and Tomra Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halma Plc position performs unexpectedly, Tomra Systems 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 Tomra Systems will offset losses from the drop in Tomra Systems' long position.| Halma Plc vs. Griffon | Halma Plc vs. Brookfield Business Partners | Halma Plc vs. MDU Resources Group | Halma Plc vs. Matthews International |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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