Correlation Between Hexcel and Strategic Investments
Can any of the company-specific risk be diversified away by investing in both Hexcel and Strategic Investments 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 Hexcel and Strategic Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexcel and Strategic Investments AS, you can compare the effects of market volatilities on Hexcel and Strategic Investments 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 Hexcel with a short position of Strategic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexcel and Strategic Investments.
Diversification Opportunities for Hexcel and Strategic Investments
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hexcel and Strategic is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hexcel and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments and Hexcel 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 Hexcel are associated (or correlated) with Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of Hexcel i.e., Hexcel and Strategic Investments go up and down completely randomly.
Pair Corralation between Hexcel and Strategic Investments
Assuming the 90 days horizon Hexcel is expected to under-perform the Strategic Investments. But the stock apears to be less risky and, when comparing its historical volatility, Hexcel is 2.18 times less risky than Strategic Investments. The stock trades about -0.01 of its potential returns per unit of risk. The Strategic Investments AS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Strategic Investments AS on September 3, 2024 and sell it today you would lose (1.00) from holding Strategic Investments AS or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexcel vs. Strategic Investments AS
Performance |
| Timeline |
| Hexcel |
| Strategic Investments |
Hexcel and Strategic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexcel and Strategic Investments
The main advantage of trading using opposite Hexcel and Strategic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexcel position performs unexpectedly, Strategic Investments 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 Strategic Investments will offset losses from the drop in Strategic Investments' long position.| Hexcel vs. VIAPLAY GROUP AB | Hexcel vs. Playa Hotels Resorts | Hexcel vs. PLAY2CHILL SA ZY | Hexcel vs. ARISTOCRAT LEISURE |
| Strategic Investments vs. Japan Tobacco | Strategic Investments vs. MAROC TELECOM | Strategic Investments vs. REGAL HOTEL INTL | Strategic Investments vs. Host Hotels Resorts |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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