Correlation Between Hitech Development and Bergman Beving

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

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

Diversification Opportunities for Hitech Development and Bergman Beving

0.28

Correlation Coefficient

Hitech Development  Bergman Beving

Modest diversification

The 3 months correlation between Hitech and Bergman is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hitech Development Wireless and Bergman Beving AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergman Beving AB and Hitech Development 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 Hitech Development Wireless are associated (or correlated) with Bergman Beving. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergman Beving AB has no effect on the direction of Hitech Development i.e., Hitech Development and Bergman Beving go up and down completely randomly.

Pair Corralation between Hitech Development and Bergman Beving

Assuming the 90 days trading horizon Hitech Development Wireless is expected to under-perform the Bergman Beving. In addition to that, Hitech Development is 4.41 times more volatile than Bergman Beving AB. It trades about -0.28 of its total potential returns per unit of risk. Bergman Beving AB is currently generating about 0.25 per unit of volatility. If you would invest  29,450  in Bergman Beving AB on October 5, 2024 and sell it today you would earn a total of  2,550  from holding Bergman Beving AB or generate 8.66% return on investment over 90 days.

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

Hitech Development Wireless  vs.  Bergman Beving AB

Hitech Development

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Hitech Development Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Hitech Development unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bergman Beving AB

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Bergman Beving AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bergman Beving is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hitech Development and Bergman Beving

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

The idea behind Hitech Development Wireless and Bergman Beving 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.