Correlation Between Softronic and H M
Can any of the company-specific risk be diversified away by investing in both Softronic and H M 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 Softronic and H M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softronic AB and H M Hennes, you can compare the effects of market volatilities on Softronic and H M 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 Softronic with a short position of H M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softronic and H M.
Diversification Opportunities for Softronic and H M
Excellent diversification
The 3 months correlation between Softronic and HM-B is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and H M Hennes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H M Hennes and Softronic 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 Softronic AB are associated (or correlated) with H M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H M Hennes has no effect on the direction of Softronic i.e., Softronic and H M go up and down completely randomly.
Pair Corralation between Softronic and H M
Assuming the 90 days trading horizon Softronic is expected to generate 1.54 times less return on investment than H M. But when comparing it to its historical volatility, Softronic AB is 1.18 times less risky than H M. It trades about 0.03 of its potential returns per unit of risk. H M Hennes is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 11,114 in H M Hennes on September 3, 2024 and sell it today you would earn a total of 4,011 from holding H M Hennes or generate 36.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Softronic AB vs. H M Hennes
Performance |
| Timeline |
| Softronic AB |
| H M Hennes |
Softronic and H M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Softronic and H M
The main advantage of trading using opposite Softronic and H M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softronic position performs unexpectedly, H M 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 H M will offset losses from the drop in H M's long position.| Softronic vs. Svenska Aerogel Holding | Softronic vs. Acarix AS | Softronic vs. Clean Motion AB | Softronic vs. AroCell AB |
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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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