Correlation Between Nexcom AS and Hydract AS
Can any of the company-specific risk be diversified away by investing in both Nexcom AS and Hydract 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 Nexcom AS and Hydract AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nexcom AS and Hydract AS, you can compare the effects of market volatilities on Nexcom AS and Hydract 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 Nexcom AS with a short position of Hydract AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexcom AS and Hydract AS.
Diversification Opportunities for Nexcom AS and Hydract AS
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nexcom and Hydract is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nexcom AS and Hydract AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydract AS and Nexcom 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 Nexcom AS are associated (or correlated) with Hydract AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydract AS has no effect on the direction of Nexcom AS i.e., Nexcom AS and Hydract AS go up and down completely randomly.
Pair Corralation between Nexcom AS and Hydract AS
Assuming the 90 days trading horizon Nexcom AS is expected to generate 0.76 times more return on investment than Hydract AS. However, Nexcom AS is 1.32 times less risky than Hydract AS. It trades about 0.06 of its potential returns per unit of risk. Hydract AS is currently generating about -0.01 per unit of risk. If you would invest 181.00 in Nexcom AS on August 29, 2024 and sell it today you would earn a total of 217.00 from holding Nexcom AS or generate 119.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexcom AS vs. Hydract AS
Performance |
| Timeline |
| Nexcom AS |
| Hydract AS |
Nexcom AS and Hydract AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexcom AS and Hydract AS
The main advantage of trading using opposite Nexcom AS and Hydract AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexcom AS position performs unexpectedly, Hydract 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 Hydract AS will offset losses from the drop in Hydract AS's long position.The idea behind Nexcom AS and Hydract AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hydract AS vs. cBrain AS | Hydract AS vs. Penneo AS | Hydract AS vs. Shape Robotics AS | Hydract AS vs. ALK Abell AS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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