Correlation Between Investor and Hexagon AB
Can any of the company-specific risk be diversified away by investing in both Investor and Hexagon AB 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 Investor and Hexagon AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB ser and Hexagon AB, you can compare the effects of market volatilities on Investor and Hexagon AB 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 Investor with a short position of Hexagon AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Hexagon AB.
Diversification Opportunities for Investor and Hexagon AB
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investor and Hexagon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Hexagon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon AB and Investor 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 Investor AB ser are associated (or correlated) with Hexagon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon AB has no effect on the direction of Investor i.e., Investor and Hexagon AB go up and down completely randomly.
Pair Corralation between Investor and Hexagon AB
Assuming the 90 days trading horizon Investor AB ser is expected to generate 0.41 times more return on investment than Hexagon AB. However, Investor AB ser is 2.46 times less risky than Hexagon AB. It trades about -0.24 of its potential returns per unit of risk. Hexagon AB is currently generating about -0.37 per unit of risk. If you would invest 30,749 in Investor AB ser on August 29, 2024 and sell it today you would lose (1,269) from holding Investor AB ser or give up 4.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investor AB ser vs. Hexagon AB
Performance |
| Timeline |
| Investor AB ser |
| Hexagon AB |
Investor and Hexagon AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and Hexagon AB
The main advantage of trading using opposite Investor and Hexagon AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, Hexagon AB 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 Hexagon AB will offset losses from the drop in Hexagon AB's long position.| Investor vs. Norva24 Group AB | Investor vs. KABE Group AB | Investor vs. IAR Systems Group | Investor vs. Clinical Laserthermia Systems |
| Hexagon AB vs. Integrum AB Series | Hexagon AB vs. Concejo AB | Hexagon AB vs. Diadrom Holding AB | Hexagon AB vs. Greater Than AB |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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