Correlation Between Airthings ASA and Huddly AS

Can any of the company-specific risk be diversified away by investing in both Airthings ASA and Huddly AS 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 Airthings ASA and Huddly AS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Airthings ASA and Huddly AS, you can compare the effects of market volatilities on Airthings ASA and Huddly AS 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 Airthings ASA with a short position of Huddly AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airthings ASA and Huddly AS.

Diversification Opportunities for Airthings ASA and Huddly AS

0.39

Correlation Coefficient

Airthings ASA  Huddly AS

Weak diversification

The 3 months correlation between Airthings and Huddly is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Airthings ASA and Huddly AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huddly AS and Airthings ASA 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 Airthings ASA are associated (or correlated) with Huddly AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huddly AS has no effect on the direction of Airthings ASA i.e., Airthings ASA and Huddly AS go up and down completely randomly.

Pair Corralation between Airthings ASA and Huddly AS

Assuming the 90 days trading horizon Airthings ASA is expected to generate 0.5 times more return on investment than Huddly AS. However, Airthings ASA is 2.0 times less risky than Huddly AS. It trades about 0.01 of its potential returns per unit of risk. Huddly AS is currently generating about -0.11 per unit of risk. If you would invest  247.00  in Airthings ASA on September 13, 2024 and sell it today you would lose (6.00) from holding Airthings ASA or give up 2.43% of portfolio value over 90 days.

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

Airthings ASA  vs.  Huddly AS

Airthings ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Airthings ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Airthings ASA is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Huddly AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huddly AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Airthings ASA and Huddly AS

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

The idea behind Airthings ASA and Huddly AS 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .