Correlation Between Hydratec Industries and Kendrion
Can any of the company-specific risk be diversified away by investing in both Hydratec Industries and Kendrion 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 Kendrion 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 Kendrion NV, you can compare the effects of market volatilities on Hydratec Industries and Kendrion 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 Kendrion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydratec Industries and Kendrion.
Diversification Opportunities for Hydratec Industries and Kendrion
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hydratec and Kendrion is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hydratec Industries NV and Kendrion NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kendrion NV 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 Kendrion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kendrion NV has no effect on the direction of Hydratec Industries i.e., Hydratec Industries and Kendrion go up and down completely randomly.
Pair Corralation between Hydratec Industries and Kendrion
Assuming the 90 days trading horizon Hydratec Industries NV is expected to generate 2.13 times more return on investment than Kendrion. However, Hydratec Industries is 2.13 times more volatile than Kendrion NV. It trades about 0.07 of its potential returns per unit of risk. Kendrion NV is currently generating about -0.06 per unit of risk. If you would invest 8,048 in Hydratec Industries NV on August 31, 2024 and sell it today you would earn a total of 7,952 from holding Hydratec Industries NV or generate 98.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Hydratec Industries NV vs. Kendrion NV
Performance |
| Timeline |
| Hydratec Industries |
| Kendrion NV |
Hydratec Industries and Kendrion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydratec Industries and Kendrion
The main advantage of trading using opposite Hydratec Industries and Kendrion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydratec Industries position performs unexpectedly, Kendrion 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 Kendrion will offset losses from the drop in Kendrion's long position.| Hydratec Industries vs. Holland Colours NV | Hydratec Industries vs. NV Nederlandsche Apparatenfabriek | Hydratec Industries vs. Amsterdam Commodities NV | Hydratec Industries vs. TKH Group NV |
| Kendrion vs. TKH Group NV | Kendrion vs. NV Nederlandsche Apparatenfabriek | Kendrion vs. Brunel International NV | Kendrion vs. Aalberts Industries NV |
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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