Correlation Between Hydratec Industries and VEON
Can any of the company-specific risk be diversified away by investing in both Hydratec Industries and VEON 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 VEON 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 VEON, you can compare the effects of market volatilities on Hydratec Industries and VEON 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 VEON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydratec Industries and VEON.
Diversification Opportunities for Hydratec Industries and VEON
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hydratec and VEON is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hydratec Industries NV and VEON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VEON 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 VEON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VEON has no effect on the direction of Hydratec Industries i.e., Hydratec Industries and VEON go up and down completely randomly.
Pair Corralation between Hydratec Industries and VEON
Assuming the 90 days trading horizon Hydratec Industries is expected to generate 4.04 times less return on investment than VEON. But when comparing it to its historical volatility, Hydratec Industries NV is 4.58 times less risky than VEON. It trades about 0.07 of its potential returns per unit of risk. VEON is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 115.00 in VEON on August 30, 2024 and sell it today you would earn a total of 4.00 from holding VEON or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.96% |
| Values | Daily Returns |
Hydratec Industries NV vs. VEON
Performance |
| Timeline |
| Hydratec Industries |
| VEON |
Hydratec Industries and VEON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydratec Industries and VEON
The main advantage of trading using opposite Hydratec Industries and VEON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydratec Industries position performs unexpectedly, VEON 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 VEON will offset losses from the drop in VEON's long position.| Hydratec Industries vs. Akzo Nobel NV | Hydratec Industries vs. Koninklijke KPN NV | Hydratec Industries vs. Aegon NV | Hydratec Industries vs. BlackRock ESG Multi Asset |
| VEON vs. Van Lanschot NV | VEON vs. Amsterdam Commodities NV | VEON vs. ForFarmers NV | VEON vs. Wereldhave 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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