Correlation Between Exor NV and First Hydrogen

Can any of the company-specific risk be diversified away by investing in both Exor NV and First Hydrogen 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 Exor NV and First Hydrogen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exor NV and First Hydrogen Corp, you can compare the effects of market volatilities on Exor NV and First Hydrogen 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 Exor NV with a short position of First Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exor NV and First Hydrogen.

Diversification Opportunities for Exor NV and First Hydrogen

0.84

Correlation Coefficient

Exor NV  First Hydrogen

Very poor diversification

The 3 months correlation between Exor and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Exor NV and First Hydrogen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hydrogen Corp and Exor NV 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 Exor NV are associated (or correlated) with First Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hydrogen Corp has no effect on the direction of Exor NV i.e., Exor NV and First Hydrogen go up and down completely randomly.

Pair Corralation between Exor NV and First Hydrogen

Assuming the 90 days horizon Exor NV is expected to generate 0.31 times more return on investment than First Hydrogen. However, Exor NV is 3.19 times less risky than First Hydrogen. It trades about -0.11 of its potential returns per unit of risk. First Hydrogen Corp is currently generating about -0.04 per unit of risk. If you would invest  10,839  in Exor NV on September 13, 2024 and sell it today you would lose (1,039) from holding Exor NV or give up 9.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Exor NV  vs.  First Hydrogen Corp

Exor NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exor NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

First Hydrogen Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Hydrogen Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Exor NV and First Hydrogen

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

The idea behind Exor NV and First Hydrogen Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.