Correlation Between Sinch AB and Hexagon AB
Can any of the company-specific risk be diversified away by investing in both Sinch AB and Hexagon AB 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 Sinch AB and Hexagon AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sinch AB and Hexagon AB, you can compare the effects of market volatilities on Sinch AB and Hexagon AB 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 Sinch AB with a short position of Hexagon AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinch AB and Hexagon AB.
Diversification Opportunities for Sinch AB and Hexagon AB
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sinch and Hexagon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sinch AB and Hexagon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon AB and Sinch AB 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 Sinch AB are associated (or correlated) with Hexagon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon AB has no effect on the direction of Sinch AB i.e., Sinch AB and Hexagon AB go up and down completely randomly.
Pair Corralation between Sinch AB and Hexagon AB
Assuming the 90 days trading horizon Sinch AB is expected to generate 2.64 times more return on investment than Hexagon AB. However, Sinch AB is 2.64 times more volatile than Hexagon AB. It trades about 0.01 of its potential returns per unit of risk. Hexagon AB is currently generating about -0.05 per unit of risk. If you would invest 2,425 in Sinch AB on August 31, 2024 and sell it today you would lose (430.00) from holding Sinch AB or give up 17.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinch AB vs. Hexagon AB
Performance |
| Timeline |
| Sinch AB |
| Hexagon AB |
Sinch AB and Hexagon AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinch AB and Hexagon AB
The main advantage of trading using opposite Sinch AB and Hexagon AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinch AB position performs unexpectedly, Hexagon AB 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 AB will offset losses from the drop in Hexagon AB's long position.| Sinch AB vs. Embracer Group AB | Sinch AB vs. Samhllsbyggnadsbolaget i Norden | Sinch AB vs. Evolution AB | Sinch AB vs. Stillfront Group AB |
| Hexagon AB vs. Impact Coatings publ | Hexagon AB vs. Catella AB | Hexagon AB vs. Lidds AB | Hexagon AB vs. CellaVision AB |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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