Correlation Between Festi Hf and Hagar Hf

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

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

Diversification Opportunities for Festi Hf and Hagar Hf

0.3

Correlation Coefficient

Festi Hf  Hagar Hf

Weak diversification

The 3 months correlation between Festi and Hagar is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Festi hf and Hagar hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hagar hf and Festi Hf 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 Festi hf are associated (or correlated) with Hagar Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hagar hf has no effect on the direction of Festi Hf i.e., Festi Hf and Hagar Hf go up and down completely randomly.

Pair Corralation between Festi Hf and Hagar Hf

Assuming the 90 days trading horizon Festi hf is expected to generate 0.83 times more return on investment than Hagar Hf. However, Festi hf is 1.21 times less risky than Hagar Hf. It trades about 0.06 of its potential returns per unit of risk. Hagar hf is currently generating about -0.05 per unit of risk. If you would invest  28,400  in Festi hf on December 30, 2024 and sell it today you would earn a total of  1,200  from holding Festi hf or generate 4.23% return on investment over 90 days.

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

Festi hf  vs.  Hagar hf

Festi hf

Risk-Adjusted Performance

Insignificant

Over the last 90 days Festi hf has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Festi Hf is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Hagar hf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hagar hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Hagar Hf is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Festi Hf and Hagar Hf

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

The idea behind Festi hf and Hagar hf 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.