Correlation Between Tomra Systems and Hexagon Composites
Can any of the company-specific risk be diversified away by investing in both Tomra Systems and Hexagon Composites 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 Tomra Systems and Hexagon Composites into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tomra Systems ASA and Hexagon Composites ASA, you can compare the effects of market volatilities on Tomra Systems and Hexagon Composites 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 Tomra Systems with a short position of Hexagon Composites. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tomra Systems and Hexagon Composites.
Diversification Opportunities for Tomra Systems and Hexagon Composites
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tomra and Hexagon is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Tomra Systems ASA and Hexagon Composites ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon Composites ASA and Tomra Systems 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 Tomra Systems ASA are associated (or correlated) with Hexagon Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon Composites ASA has no effect on the direction of Tomra Systems i.e., Tomra Systems and Hexagon Composites go up and down completely randomly.
Pair Corralation between Tomra Systems and Hexagon Composites
Assuming the 90 days trading horizon Tomra Systems ASA is expected to generate 0.83 times more return on investment than Hexagon Composites. However, Tomra Systems ASA is 1.2 times less risky than Hexagon Composites. It trades about 0.06 of its potential returns per unit of risk. Hexagon Composites ASA is currently generating about -0.09 per unit of risk. If you would invest 15,080 in Tomra Systems ASA on October 21, 2024 and sell it today you would earn a total of 270.00 from holding Tomra Systems ASA or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tomra Systems ASA vs. Hexagon Composites ASA
Performance |
| Timeline |
| Tomra Systems ASA |
| Hexagon Composites ASA |
Tomra Systems and Hexagon Composites Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tomra Systems and Hexagon Composites
The main advantage of trading using opposite Tomra Systems and Hexagon Composites positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tomra Systems position performs unexpectedly, Hexagon Composites 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 Composites will offset losses from the drop in Hexagon Composites' long position.| Tomra Systems vs. Orkla ASA | Tomra Systems vs. Telenor ASA | Tomra Systems vs. Yara International ASA | Tomra Systems vs. SalMar ASA |
| Hexagon Composites vs. Hexagon Purus As | Hexagon Composites vs. Nel ASA | Hexagon Composites vs. Powercell Sweden | Hexagon Composites vs. Tomra Systems ASA |
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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