Correlation Between Husqvarna and Techtronic Industries
Can any of the company-specific risk be diversified away by investing in both Husqvarna and Techtronic Industries 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 Husqvarna and Techtronic Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husqvarna AB and Techtronic Industries Ltd, you can compare the effects of market volatilities on Husqvarna and Techtronic Industries 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 Husqvarna with a short position of Techtronic Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husqvarna and Techtronic Industries.
Diversification Opportunities for Husqvarna and Techtronic Industries
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Husqvarna and Techtronic is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Husqvarna AB and Techtronic Industries Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techtronic Industries and Husqvarna 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 Husqvarna AB are associated (or correlated) with Techtronic Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techtronic Industries has no effect on the direction of Husqvarna i.e., Husqvarna and Techtronic Industries go up and down completely randomly.
Pair Corralation between Husqvarna and Techtronic Industries
Assuming the 90 days horizon Husqvarna AB is expected to under-perform the Techtronic Industries. But the pink sheet apears to be less risky and, when comparing its historical volatility, Husqvarna AB is 1.06 times less risky than Techtronic Industries. The pink sheet trades about -0.26 of its potential returns per unit of risk. The Techtronic Industries Ltd is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 7,849 in Techtronic Industries Ltd on August 28, 2024 and sell it today you would lose (957.00) from holding Techtronic Industries Ltd or give up 12.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Husqvarna AB vs. Techtronic Industries Ltd
Performance |
| Timeline |
| Husqvarna AB |
| Techtronic Industries |
Husqvarna and Techtronic Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Husqvarna and Techtronic Industries
The main advantage of trading using opposite Husqvarna and Techtronic Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husqvarna position performs unexpectedly, Techtronic Industries 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 Techtronic Industries will offset losses from the drop in Techtronic Industries' long position.| Husqvarna vs. SMC Corp Japan | Husqvarna vs. Hong Kong Exchange | Husqvarna vs. AIA Group Ltd | Husqvarna vs. Techtronic Industries |
| Techtronic Industries vs. SMC Corp Japan | Techtronic Industries vs. Hong Kong Exchange | Techtronic Industries vs. AIA Group Ltd | Techtronic Industries vs. Techtronic Industries |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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