Correlation Between AlzChem Group and Hays Plc

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

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

Diversification Opportunities for AlzChem Group and Hays Plc

-0.66

Correlation Coefficient

AlzChem Group  Hays Plc

Excellent diversification

The 3 months correlation between AlzChem and Hays is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding AlzChem Group AG and Hays plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hays plc and AlzChem Group 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 AlzChem Group AG are associated (or correlated) with Hays Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hays plc has no effect on the direction of AlzChem Group i.e., AlzChem Group and Hays Plc go up and down completely randomly.

Pair Corralation between AlzChem Group and Hays Plc

Assuming the 90 days trading horizon AlzChem Group AG is expected to generate 0.99 times more return on investment than Hays Plc. However, AlzChem Group AG is 1.01 times less risky than Hays Plc. It trades about 0.2 of its potential returns per unit of risk. Hays plc is currently generating about -0.03 per unit of risk. If you would invest  4,070  in AlzChem Group AG on September 17, 2024 and sell it today you would earn a total of  1,890  from holding AlzChem Group AG or generate 46.44% return on investment over 90 days.

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

AlzChem Group AG  vs.  Hays plc

AlzChem Group AG

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AlzChem Group AG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, AlzChem Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hays plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AlzChem Group and Hays Plc

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

The idea behind AlzChem Group AG and Hays plc 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.