Correlation Between Hydratec Industries and Legal General
Can any of the company-specific risk be diversified away by investing in both Hydratec Industries and Legal General 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 Hydratec Industries and Legal General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hydratec Industries NV and Legal General UCITS, you can compare the effects of market volatilities on Hydratec Industries and Legal General 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 Hydratec Industries with a short position of Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydratec Industries and Legal General.
Diversification Opportunities for Hydratec Industries and Legal General
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hydratec and Legal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hydratec Industries NV and Legal General UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General UCITS and Hydratec Industries 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 Hydratec Industries NV are associated (or correlated) with Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General UCITS has no effect on the direction of Hydratec Industries i.e., Hydratec Industries and Legal General go up and down completely randomly.
Pair Corralation between Hydratec Industries and Legal General
Assuming the 90 days trading horizon Hydratec Industries NV is expected to generate 2.16 times more return on investment than Legal General. However, Hydratec Industries is 2.16 times more volatile than Legal General UCITS. It trades about 0.09 of its potential returns per unit of risk. Legal General UCITS is currently generating about 0.14 per unit of risk. If you would invest 13,900 in Hydratec Industries NV on September 12, 2024 and sell it today you would earn a total of 1,900 from holding Hydratec Industries NV or generate 13.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hydratec Industries NV vs. Legal General UCITS
Performance |
| Timeline |
| Hydratec Industries |
| Legal General UCITS |
Hydratec Industries and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydratec Industries and Legal General
The main advantage of trading using opposite Hydratec Industries and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydratec Industries position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| Hydratec Industries vs. Holland Colours NV | Hydratec Industries vs. Amsterdam Commodities NV | Hydratec Industries vs. TKH Group NV |
| Legal General vs. Legal General UCITS | Legal General vs. LG Russell 2000 | Legal General vs. VanEck Multi Asset Growth | Legal General vs. iShares III Public |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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