Correlation Between Hemisphere Energy and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Hemisphere Energy and Volkswagen 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 Hemisphere Energy and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hemisphere Energy Corp and Volkswagen AG, you can compare the effects of market volatilities on Hemisphere Energy and Volkswagen 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 Hemisphere Energy with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hemisphere Energy and Volkswagen.
Diversification Opportunities for Hemisphere Energy and Volkswagen
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hemisphere and Volkswagen is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy Corp and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Hemisphere Energy 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 Hemisphere Energy Corp are associated (or correlated) with Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Hemisphere Energy i.e., Hemisphere Energy and Volkswagen go up and down completely randomly.
Pair Corralation between Hemisphere Energy and Volkswagen
Assuming the 90 days trading horizon Hemisphere Energy Corp is expected to generate 1.24 times more return on investment than Volkswagen. However, Hemisphere Energy is 1.24 times more volatile than Volkswagen AG. It trades about 0.1 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.21 per unit of risk. If you would invest 99.00 in Hemisphere Energy Corp on September 3, 2024 and sell it today you would earn a total of 25.00 from holding Hemisphere Energy Corp or generate 25.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hemisphere Energy Corp vs. Volkswagen AG
Performance |
| Timeline |
| Hemisphere Energy Corp |
| Volkswagen AG |
Hemisphere Energy and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hemisphere Energy and Volkswagen
The main advantage of trading using opposite Hemisphere Energy and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hemisphere Energy position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Hemisphere Energy vs. United Breweries Co | Hemisphere Energy vs. JAPAN TOBACCO UNSPADR12 | Hemisphere Energy vs. INDOFOOD AGRI RES | Hemisphere Energy vs. BRIT AMER TOBACCO |
| Volkswagen vs. Hemisphere Energy Corp | Volkswagen vs. Microbot Medical | Volkswagen vs. Air Lease | Volkswagen vs. Chunghwa Telecom Co |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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