Correlation Between Hansen Technologies and Technology One
Can any of the company-specific risk be diversified away by investing in both Hansen Technologies and Technology One 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 Technology One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansen Technologies and Technology One, you can compare the effects of market volatilities on Hansen Technologies and Technology One 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 Technology One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansen Technologies and Technology One.
Diversification Opportunities for Hansen Technologies and Technology One
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hansen and Technology is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hansen Technologies and Technology One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology One 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 Technology One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology One has no effect on the direction of Hansen Technologies i.e., Hansen Technologies and Technology One go up and down completely randomly.
Pair Corralation between Hansen Technologies and Technology One
Assuming the 90 days trading horizon Hansen Technologies is expected to generate 0.86 times more return on investment than Technology One. However, Hansen Technologies is 1.17 times less risky than Technology One. It trades about -0.12 of its potential returns per unit of risk. Technology One is currently generating about -0.2 per unit of risk. If you would invest 532.00 in Hansen Technologies on October 20, 2024 and sell it today you would lose (14.00) from holding Hansen Technologies or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansen Technologies vs. Technology One
Performance |
| Timeline |
| Hansen Technologies |
| Technology One |
Hansen Technologies and Technology One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansen Technologies and Technology One
The main advantage of trading using opposite Hansen Technologies and Technology One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansen Technologies position performs unexpectedly, Technology One 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 Technology One will offset losses from the drop in Technology One's long position.| Hansen Technologies vs. Retail Food Group | Hansen Technologies vs. Collins Foods | Hansen Technologies vs. Charter Hall Retail | Hansen Technologies vs. Argo Investments |
| Technology One vs. Actinogen Medical | Technology One vs. WiseTech Global Limited | Technology One vs. Advanced Braking Technology | Technology One vs. Macquarie Technology Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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