Correlation Between Sika AG and HEXPOL AB
Can any of the company-specific risk be diversified away by investing in both Sika AG and HEXPOL 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 Sika AG and HEXPOL AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sika AG ADR and HEXPOL AB, you can compare the effects of market volatilities on Sika AG and HEXPOL 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 Sika AG with a short position of HEXPOL AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sika AG and HEXPOL AB.
Diversification Opportunities for Sika AG and HEXPOL AB
Poor diversification
The 3 months correlation between Sika and HEXPOL is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sika AG ADR and HEXPOL AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXPOL AB and Sika AG 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 Sika AG ADR are associated (or correlated) with HEXPOL AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXPOL AB has no effect on the direction of Sika AG i.e., Sika AG and HEXPOL AB go up and down completely randomly.
Pair Corralation between Sika AG and HEXPOL AB
Assuming the 90 days horizon Sika AG ADR is expected to generate 0.62 times more return on investment than HEXPOL AB. However, Sika AG ADR is 1.63 times less risky than HEXPOL AB. It trades about -0.04 of its potential returns per unit of risk. HEXPOL AB is currently generating about -0.05 per unit of risk. If you would invest 2,884 in Sika AG ADR on August 27, 2024 and sell it today you would lose (299.00) from holding Sika AG ADR or give up 10.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.89% |
| Values | Daily Returns |
Sika AG ADR vs. HEXPOL AB
Performance |
| Timeline |
| Sika AG ADR |
| HEXPOL AB |
Sika AG and HEXPOL AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sika AG and HEXPOL AB
The main advantage of trading using opposite Sika AG and HEXPOL AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sika AG position performs unexpectedly, HEXPOL 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 HEXPOL AB will offset losses from the drop in HEXPOL AB's long position.| Sika AG vs. First Graphene | Sika AG vs. HUMANA INC | Sika AG vs. Aquagold International | Sika AG vs. Barloworld Ltd ADR |
| HEXPOL AB vs. First Graphene | HEXPOL AB vs. HUMANA INC | HEXPOL AB vs. Aquagold International | HEXPOL AB vs. Barloworld Ltd ADR |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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