Correlation Between Hypothekarbank Lenzburg and Adval Tech

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

By analyzing existing cross correlation between Hypothekarbank Lenzburg AG and Adval Tech Holding, you can compare the effects of market volatilities on Hypothekarbank Lenzburg and Adval Tech 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 Hypothekarbank Lenzburg with a short position of Adval Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hypothekarbank Lenzburg and Adval Tech.

Diversification Opportunities for Hypothekarbank Lenzburg and Adval Tech

0.77

Correlation Coefficient

Hypothekarbank Lenzburg  Adval Tech

Poor diversification

The 3 months correlation between Hypothekarbank and Adval is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hypothekarbank Lenzburg AG and Adval Tech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adval Tech Holding and Hypothekarbank Lenzburg 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 Hypothekarbank Lenzburg AG are associated (or correlated) with Adval Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adval Tech Holding has no effect on the direction of Hypothekarbank Lenzburg i.e., Hypothekarbank Lenzburg and Adval Tech go up and down completely randomly.

Pair Corralation between Hypothekarbank Lenzburg and Adval Tech

Assuming the 90 days trading horizon Hypothekarbank Lenzburg AG is expected to generate 0.16 times more return on investment than Adval Tech. However, Hypothekarbank Lenzburg AG is 6.1 times less risky than Adval Tech. It trades about -0.07 of its potential returns per unit of risk. Adval Tech Holding is currently generating about -0.05 per unit of risk. If you would invest  408,000  in Hypothekarbank Lenzburg AG on September 12, 2024 and sell it today you would lose (10,000) from holding Hypothekarbank Lenzburg AG or give up 2.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	79.03%
Values	Daily Returns

Hypothekarbank Lenzburg AG  vs.  Adval Tech Holding

Hypothekarbank Lenzburg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hypothekarbank Lenzburg AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hypothekarbank Lenzburg is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Adval Tech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adval Tech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Hypothekarbank Lenzburg and Adval Tech

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

The idea behind Hypothekarbank Lenzburg AG and Adval Tech Holding 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.