Correlation Between Herms International and Pandora A/S
Can any of the company-specific risk be diversified away by investing in both Herms International and Pandora A/S 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 Herms International and Pandora A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herms International Socit and Pandora AS, you can compare the effects of market volatilities on Herms International and Pandora A/S 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 Herms International with a short position of Pandora A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herms International and Pandora A/S.
Diversification Opportunities for Herms International and Pandora A/S
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Herms and Pandora is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Herms International Socit and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora A/S and Herms 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 Herms International Socit are associated (or correlated) with Pandora A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora A/S has no effect on the direction of Herms International i.e., Herms International and Pandora A/S go up and down completely randomly.
Pair Corralation between Herms International and Pandora A/S
Assuming the 90 days horizon Herms International is expected to generate 1.11 times less return on investment than Pandora A/S. In addition to that, Herms International is 1.01 times more volatile than Pandora AS. It trades about 0.3 of its total potential returns per unit of risk. Pandora AS is currently generating about 0.33 per unit of volatility. If you would invest 14,985 in Pandora AS on September 25, 2024 and sell it today you would earn a total of 2,035 from holding Pandora AS or generate 13.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herms International Socit vs. Pandora AS
Performance |
| Timeline |
| Herms International Socit |
| Pandora A/S |
Herms International and Pandora A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herms International and Pandora A/S
The main advantage of trading using opposite Herms International and Pandora A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herms International position performs unexpectedly, Pandora A/S 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 Pandora A/S will offset losses from the drop in Pandora A/S's long position.| Herms International vs. Martin Marietta Materials | Herms International vs. Heidelberg Materials AG | Herms International vs. GRIFFIN MINING LTD | Herms International vs. Jacquet Metal Service |
| Pandora A/S vs. LVMH Mot Hennessy | Pandora A/S vs. LVMH Mot Hennessy | Pandora A/S vs. LVMH Mot Hennessy | Pandora A/S vs. Herms International Socit |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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