Correlation Between HYDROFARM HLD and KION Group

Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD and KION Group 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 HYDROFARM HLD and KION Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HYDROFARM HLD GRP and KION Group AG, you can compare the effects of market volatilities on HYDROFARM HLD and KION Group 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 HYDROFARM HLD with a short position of KION Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and KION Group.

Diversification Opportunities for HYDROFARM HLD and KION Group

-0.11

Correlation Coefficient

HYDROFARM HLD  KION Group

Good diversification

The 3 months correlation between HYDROFARM and KION is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and KION Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KION Group AG and HYDROFARM HLD 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 HYDROFARM HLD GRP are associated (or correlated) with KION Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KION Group AG has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and KION Group go up and down completely randomly.

Pair Corralation between HYDROFARM HLD and KION Group

Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to under-perform the KION Group. In addition to that, HYDROFARM HLD is 2.28 times more volatile than KION Group AG. It trades about -0.07 of its total potential returns per unit of risk. KION Group AG is currently generating about 0.05 per unit of volatility. If you would invest  3,300  in KION Group AG on October 25, 2024 and sell it today you would earn a total of  114.00  from holding KION Group AG or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

HYDROFARM HLD GRP  vs.  KION Group AG

HYDROFARM HLD GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HYDROFARM HLD GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HYDROFARM HLD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KION Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KION Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KION Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HYDROFARM HLD and KION Group

The main advantage of trading using opposite HYDROFARM HLD and KION Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYDROFARM HLD position performs unexpectedly, KION Group 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 KION Group will offset losses from the drop in KION Group's long position.

The idea behind HYDROFARM HLD GRP and KION Group AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.