Correlation Between Hansa Investment and BlackRock Frontiers

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

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

Diversification Opportunities for Hansa Investment and BlackRock Frontiers

-0.01

Correlation Coefficient

Hansa Investment  BlackRock Frontiers

Good diversification

The 3 months correlation between Hansa and BlackRock is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Investment and BlackRock Frontiers Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Frontiers and Hansa Investment 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 Hansa Investment are associated (or correlated) with BlackRock Frontiers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Frontiers has no effect on the direction of Hansa Investment i.e., Hansa Investment and BlackRock Frontiers go up and down completely randomly.

Pair Corralation between Hansa Investment and BlackRock Frontiers

Assuming the 90 days trading horizon Hansa Investment is expected to generate 1.55 times more return on investment than BlackRock Frontiers. However, Hansa Investment is 1.55 times more volatile than BlackRock Frontiers Investment. It trades about 0.0 of its potential returns per unit of risk. BlackRock Frontiers Investment is currently generating about -0.02 per unit of risk. If you would invest  22,120  in Hansa Investment on December 25, 2024 and sell it today you would lose (120.00) from holding Hansa Investment or give up 0.54% of portfolio value over 90 days.

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

Hansa Investment  vs.  BlackRock Frontiers Investment

Hansa Investment

Risk-Adjusted Performance

Very Weak

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

BlackRock Frontiers

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Hansa Investment and BlackRock Frontiers

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

The idea behind Hansa Investment and BlackRock Frontiers Investment 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.