Correlation Between Hanza AB and Genovis AB

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

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

Diversification Opportunities for Hanza AB and Genovis AB

0.04

Correlation Coefficient

Hanza AB  Genovis AB

Significant diversification

The 3 months correlation between Hanza and Genovis is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hanza AB and Genovis AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genovis AB and Hanza AB 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 Hanza AB are associated (or correlated) with Genovis AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genovis AB has no effect on the direction of Hanza AB i.e., Hanza AB and Genovis AB go up and down completely randomly.

Pair Corralation between Hanza AB and Genovis AB

Assuming the 90 days trading horizon Hanza AB is expected to generate 0.53 times more return on investment than Genovis AB. However, Hanza AB is 1.9 times less risky than Genovis AB. It trades about -0.02 of its potential returns per unit of risk. Genovis AB is currently generating about -0.07 per unit of risk. If you would invest  7,670  in Hanza AB on December 30, 2024 and sell it today you would lose (420.00) from holding Hanza AB or give up 5.48% of portfolio value over 90 days.

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

Hanza AB  vs.  Genovis AB

Hanza AB

Risk-Adjusted Performance

Very Weak

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

Genovis AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genovis AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hanza AB and Genovis AB

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

The idea behind Hanza AB and Genovis 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.