Correlation Between AB Volvo and Hexagon AB
Can any of the company-specific risk be diversified away by investing in both AB Volvo 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 AB Volvo and Hexagon AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and Hexagon AB, you can compare the effects of market volatilities on AB Volvo 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 AB Volvo with a short position of Hexagon AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and Hexagon AB.
Diversification Opportunities for AB Volvo and Hexagon AB
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between VOLV-A and Hexagon is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Hexagon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon AB and AB Volvo 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 AB Volvo 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 AB Volvo i.e., AB Volvo and Hexagon AB go up and down completely randomly.
Pair Corralation between AB Volvo and Hexagon AB
Assuming the 90 days trading horizon AB Volvo is expected to generate 0.8 times more return on investment than Hexagon AB. However, AB Volvo is 1.25 times less risky than Hexagon AB. It trades about -0.14 of its potential returns per unit of risk. Hexagon AB is currently generating about -0.37 per unit of risk. If you would invest 28,260 in AB Volvo on August 29, 2024 and sell it today you would lose (1,420) from holding AB Volvo or give up 5.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Volvo vs. Hexagon AB
Performance |
| Timeline |
| AB Volvo |
| Hexagon AB |
AB Volvo and Hexagon AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and Hexagon AB
The main advantage of trading using opposite AB Volvo and Hexagon AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo 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.| AB Volvo vs. Truecaller AB | AB Volvo vs. Hexatronic Group AB | AB Volvo vs. NCAB Group | AB Volvo vs. Troax Group AB |
| Hexagon AB vs. Integrum AB Series | Hexagon AB vs. Concejo AB | Hexagon AB vs. Diadrom Holding AB | Hexagon AB vs. Greater Than 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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