Correlation Between HEXPOL AB and Dometic Group
Can any of the company-specific risk be diversified away by investing in both HEXPOL AB and Dometic 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 HEXPOL AB and Dometic Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEXPOL AB and Dometic Group AB, you can compare the effects of market volatilities on HEXPOL AB and Dometic 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 HEXPOL AB with a short position of Dometic Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEXPOL AB and Dometic Group.
Diversification Opportunities for HEXPOL AB and Dometic Group
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HEXPOL and Dometic is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding HEXPOL AB and Dometic Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dometic Group AB and HEXPOL 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 HEXPOL AB are associated (or correlated) with Dometic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dometic Group AB has no effect on the direction of HEXPOL AB i.e., HEXPOL AB and Dometic Group go up and down completely randomly.
Pair Corralation between HEXPOL AB and Dometic Group
Assuming the 90 days trading horizon HEXPOL AB is expected to generate 0.79 times more return on investment than Dometic Group. However, HEXPOL AB is 1.26 times less risky than Dometic Group. It trades about -0.1 of its potential returns per unit of risk. Dometic Group AB is currently generating about -0.1 per unit of risk. If you would invest 12,820 in HEXPOL AB on August 29, 2024 and sell it today you would lose (2,420) from holding HEXPOL AB or give up 18.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HEXPOL AB vs. Dometic Group AB
Performance |
| Timeline |
| HEXPOL AB |
| Dometic Group AB |
HEXPOL AB and Dometic Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEXPOL AB and Dometic Group
The main advantage of trading using opposite HEXPOL AB and Dometic Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEXPOL AB position performs unexpectedly, Dometic 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 Dometic Group will offset losses from the drop in Dometic Group's long position.The idea behind HEXPOL AB and Dometic Group AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dometic Group vs. Thule Group AB | Dometic Group vs. Husqvarna AB | Dometic Group vs. Trelleborg AB | Dometic Group vs. Essity AB |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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