Correlation Between Hansen Technologies and Rea
Can any of the company-specific risk be diversified away by investing in both Hansen Technologies and Rea 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 Hansen Technologies and Rea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansen Technologies and Rea Group, you can compare the effects of market volatilities on Hansen Technologies and Rea 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 Hansen Technologies with a short position of Rea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansen Technologies and Rea.
Diversification Opportunities for Hansen Technologies and Rea
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hansen and Rea is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hansen Technologies and Rea Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rea Group and Hansen Technologies 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 Hansen Technologies are associated (or correlated) with Rea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rea Group has no effect on the direction of Hansen Technologies i.e., Hansen Technologies and Rea go up and down completely randomly.
Pair Corralation between Hansen Technologies and Rea
Assuming the 90 days trading horizon Hansen Technologies is expected to generate 3.07 times less return on investment than Rea. In addition to that, Hansen Technologies is 1.1 times more volatile than Rea Group. It trades about 0.03 of its total potential returns per unit of risk. Rea Group is currently generating about 0.1 per unit of volatility. If you would invest 12,385 in Rea Group on November 8, 2024 and sell it today you would earn a total of 12,800 from holding Rea Group or generate 103.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansen Technologies vs. Rea Group
Performance |
| Timeline |
| Hansen Technologies |
| Rea Group |
Hansen Technologies and Rea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansen Technologies and Rea
The main advantage of trading using opposite Hansen Technologies and Rea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansen Technologies position performs unexpectedly, Rea 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 Rea will offset losses from the drop in Rea's long position.| Hansen Technologies vs. Djerriwarrh Investments | Hansen Technologies vs. Sandon Capital Investments | Hansen Technologies vs. DMC Mining | Hansen Technologies vs. Hotel Property Investments |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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