Correlation Between SD Standard and Hexagon Purus
Can any of the company-specific risk be diversified away by investing in both SD Standard and Hexagon Purus 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 SD Standard and Hexagon Purus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SD Standard Drilling and Hexagon Purus As, you can compare the effects of market volatilities on SD Standard and Hexagon Purus 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 SD Standard with a short position of Hexagon Purus. Check out your portfolio center. Please also check ongoing floating volatility patterns of SD Standard and Hexagon Purus.
Diversification Opportunities for SD Standard and Hexagon Purus
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SDSD and Hexagon is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding SD Standard Drilling and Hexagon Purus As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon Purus As and SD Standard 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 SD Standard Drilling are associated (or correlated) with Hexagon Purus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon Purus As has no effect on the direction of SD Standard i.e., SD Standard and Hexagon Purus go up and down completely randomly.
Pair Corralation between SD Standard and Hexagon Purus
Assuming the 90 days trading horizon SD Standard Drilling is expected to generate 0.24 times more return on investment than Hexagon Purus. However, SD Standard Drilling is 4.1 times less risky than Hexagon Purus. It trades about 0.12 of its potential returns per unit of risk. Hexagon Purus As is currently generating about -0.08 per unit of risk. If you would invest 145.00 in SD Standard Drilling on September 5, 2024 and sell it today you would earn a total of 25.00 from holding SD Standard Drilling or generate 17.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SD Standard Drilling vs. Hexagon Purus As
Performance |
| Timeline |
| SD Standard Drilling |
| Hexagon Purus As |
SD Standard and Hexagon Purus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SD Standard and Hexagon Purus
The main advantage of trading using opposite SD Standard and Hexagon Purus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SD Standard position performs unexpectedly, Hexagon Purus 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 Purus will offset losses from the drop in Hexagon Purus' long position.| SD Standard vs. Odfjell Drilling | SD Standard vs. Solstad Offsho | SD Standard vs. Reach Subsea | SD Standard vs. Eidesvik Offshore ASA |
| Hexagon Purus vs. Scana ASA | Hexagon Purus vs. Sogn Sparebank | Hexagon Purus vs. Veidekke ASA | Hexagon Purus vs. ECIT 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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