Correlation Between Lavide Holding and Hydratec Industries
Can any of the company-specific risk be diversified away by investing in both Lavide Holding and Hydratec Industries 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 Lavide Holding and Hydratec Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lavide Holding NV and Hydratec Industries NV, you can compare the effects of market volatilities on Lavide Holding and Hydratec Industries 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 Lavide Holding with a short position of Hydratec Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lavide Holding and Hydratec Industries.
Diversification Opportunities for Lavide Holding and Hydratec Industries
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lavide and Hydratec is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lavide Holding NV and Hydratec Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydratec Industries and Lavide Holding 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 Lavide Holding NV are associated (or correlated) with Hydratec Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydratec Industries has no effect on the direction of Lavide Holding i.e., Lavide Holding and Hydratec Industries go up and down completely randomly.
Pair Corralation between Lavide Holding and Hydratec Industries
Assuming the 90 days trading horizon Lavide Holding NV is expected to under-perform the Hydratec Industries. In addition to that, Lavide Holding is 3.62 times more volatile than Hydratec Industries NV. It trades about -0.17 of its total potential returns per unit of risk. Hydratec Industries NV is currently generating about 0.2 per unit of volatility. If you would invest 15,700 in Hydratec Industries NV on August 27, 2024 and sell it today you would earn a total of 500.00 from holding Hydratec Industries NV or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lavide Holding NV vs. Hydratec Industries NV
Performance |
| Timeline |
| Lavide Holding NV |
| Hydratec Industries |
Lavide Holding and Hydratec Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lavide Holding and Hydratec Industries
The main advantage of trading using opposite Lavide Holding and Hydratec Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lavide Holding position performs unexpectedly, Hydratec Industries 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 Hydratec Industries will offset losses from the drop in Hydratec Industries' long position.| Lavide Holding vs. ASML Holding NV | Lavide Holding vs. Prosus NV | Lavide Holding vs. Just Eat Takeaway | Lavide Holding vs. Koninklijke Ahold Delhaize |
| Hydratec Industries vs. Pharming Group NV | Hydratec Industries vs. AMG Advanced Metallurgical | Hydratec Industries vs. BE Semiconductor Industries |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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