Correlation Between Hydract AS and Nexcom AS
Can any of the company-specific risk be diversified away by investing in both Hydract AS and Nexcom AS 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 Hydract AS and Nexcom AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hydract AS and Nexcom AS, you can compare the effects of market volatilities on Hydract AS and Nexcom AS 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 Hydract AS with a short position of Nexcom AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydract AS and Nexcom AS.
Diversification Opportunities for Hydract AS and Nexcom AS
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hydract and Nexcom is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hydract AS and Nexcom AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexcom AS and Hydract AS 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 Hydract AS are associated (or correlated) with Nexcom AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexcom AS has no effect on the direction of Hydract AS i.e., Hydract AS and Nexcom AS go up and down completely randomly.
Pair Corralation between Hydract AS and Nexcom AS
Assuming the 90 days trading horizon Hydract AS is expected to generate 1.95 times more return on investment than Nexcom AS. However, Hydract AS is 1.95 times more volatile than Nexcom AS. It trades about 0.32 of its potential returns per unit of risk. Nexcom AS is currently generating about 0.0 per unit of risk. If you would invest 19.00 in Hydract AS on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Hydract AS or generate 142.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hydract AS vs. Nexcom AS
Performance |
| Timeline |
| Hydract AS |
| Nexcom AS |
Hydract AS and Nexcom AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydract AS and Nexcom AS
The main advantage of trading using opposite Hydract AS and Nexcom AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydract AS position performs unexpectedly, Nexcom AS 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 Nexcom AS will offset losses from the drop in Nexcom AS's long position.| Hydract AS vs. Fynske Bank AS | Hydract AS vs. PARKEN Sport Entertainment | Hydract AS vs. Groenlandsbanken AS | Hydract AS vs. BankInvest Value Globale |
| Nexcom AS vs. FOM Technologies AS | Nexcom AS vs. cBrain AS | Nexcom AS vs. Green Hydrogen Systems | Nexcom AS vs. BioPorto |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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