Correlation Between Greater Than and Hexagon AB

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

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

Diversification Opportunities for Greater Than and Hexagon AB

0.31

Correlation Coefficient

Greater Than  Hexagon AB

Weak diversification

The 3 months correlation between Greater and Hexagon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Greater Than AB and Hexagon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon AB and Greater Than 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 Greater Than AB are associated (or correlated) with Hexagon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon AB has no effect on the direction of Greater Than i.e., Greater Than and Hexagon AB go up and down completely randomly.

Pair Corralation between Greater Than and Hexagon AB

Assuming the 90 days trading horizon Greater Than is expected to generate 2.96 times less return on investment than Hexagon AB. In addition to that, Greater Than is 4.03 times more volatile than Hexagon AB. It trades about 0.03 of its total potential returns per unit of risk. Hexagon AB is currently generating about 0.3 per unit of volatility. If you would invest  9,316  in Hexagon AB on September 24, 2024 and sell it today you would earn a total of  1,239  from holding Hexagon AB or generate 13.3% return on investment over 90 days.

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

Greater Than AB  vs.  Hexagon AB

Greater Than AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greater Than AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Greater Than is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hexagon AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hexagon AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hexagon AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Greater Than and Hexagon AB

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

The idea behind Greater Than AB and Hexagon AB 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.