Correlation Between Powercell Sweden and Hexagon Composites
Can any of the company-specific risk be diversified away by investing in both Powercell Sweden and Hexagon Composites 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 Powercell Sweden and Hexagon Composites into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powercell Sweden and Hexagon Composites ASA, you can compare the effects of market volatilities on Powercell Sweden and Hexagon Composites 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 Powercell Sweden with a short position of Hexagon Composites. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powercell Sweden and Hexagon Composites.
Diversification Opportunities for Powercell Sweden and Hexagon Composites
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Powercell and Hexagon is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Powercell Sweden and Hexagon Composites ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon Composites ASA and Powercell Sweden 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 Powercell Sweden are associated (or correlated) with Hexagon Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon Composites ASA has no effect on the direction of Powercell Sweden i.e., Powercell Sweden and Hexagon Composites go up and down completely randomly.
Pair Corralation between Powercell Sweden and Hexagon Composites
Assuming the 90 days trading horizon Powercell Sweden is expected to under-perform the Hexagon Composites. But the stock apears to be less risky and, when comparing its historical volatility, Powercell Sweden is 1.22 times less risky than Hexagon Composites. The stock trades about -0.22 of its potential returns per unit of risk. The Hexagon Composites ASA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,040 in Hexagon Composites ASA on August 29, 2024 and sell it today you would earn a total of 240.00 from holding Hexagon Composites ASA or generate 5.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Powercell Sweden vs. Hexagon Composites ASA
Performance |
| Timeline |
| Powercell Sweden |
| Hexagon Composites ASA |
Powercell Sweden and Hexagon Composites Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powercell Sweden and Hexagon Composites
The main advantage of trading using opposite Powercell Sweden and Hexagon Composites positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powercell Sweden position performs unexpectedly, Hexagon Composites 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 Composites will offset losses from the drop in Hexagon Composites' long position.| Powercell Sweden vs. Divio Technologies AB | Powercell Sweden vs. XMReality AB | Powercell Sweden vs. KABE Group AB | Powercell Sweden vs. IAR Systems Group |
| Hexagon Composites vs. Hexagon Purus As | Hexagon Composites vs. Nel ASA | Hexagon Composites vs. Powercell Sweden | Hexagon Composites vs. Tomra Systems ASA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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