Correlation Between Penneo AS and Hydract AS
Can any of the company-specific risk be diversified away by investing in both Penneo 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 Penneo 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 Penneo AS and Hydract AS, you can compare the effects of market volatilities on Penneo 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 Penneo AS with a short position of Hydract AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penneo AS and Hydract AS.
Diversification Opportunities for Penneo AS and Hydract AS
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Penneo and Hydract is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Penneo AS and Hydract AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydract AS and Penneo 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 Penneo 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 Penneo AS i.e., Penneo AS and Hydract AS go up and down completely randomly.
Pair Corralation between Penneo AS and Hydract AS
Assuming the 90 days trading horizon Penneo AS is expected to under-perform the Hydract AS. But the stock apears to be less risky and, when comparing its historical volatility, Penneo AS is 8.05 times less risky than Hydract AS. The stock trades about -0.04 of its potential returns per unit of risk. The Hydract AS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Hydract AS on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Hydract AS or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penneo AS vs. Hydract AS
Performance |
| Timeline |
| Penneo AS |
| Hydract AS |
Penneo AS and Hydract AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penneo AS and Hydract AS
The main advantage of trading using opposite Penneo AS and Hydract AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penneo 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 Penneo 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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