Correlation Between Hitech Development and Lagercrantz Group

Can any of the company-specific risk be diversified away by investing in both Hitech Development and Lagercrantz Group 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 Lagercrantz Group 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 Lagercrantz Group AB, you can compare the effects of market volatilities on Hitech Development and Lagercrantz Group 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 Lagercrantz Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitech Development and Lagercrantz Group.

Diversification Opportunities for Hitech Development and Lagercrantz Group

-0.16

Correlation Coefficient

Hitech Development  Lagercrantz Group

Good diversification

The 3 months correlation between Hitech and Lagercrantz is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hitech Development Wireless and Lagercrantz Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lagercrantz Group 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 Lagercrantz Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lagercrantz Group has no effect on the direction of Hitech Development i.e., Hitech Development and Lagercrantz Group go up and down completely randomly.

Pair Corralation between Hitech Development and Lagercrantz Group

Assuming the 90 days trading horizon Hitech Development Wireless is expected to generate 13.86 times more return on investment than Lagercrantz Group. However, Hitech Development is 13.86 times more volatile than Lagercrantz Group AB. It trades about 0.04 of its potential returns per unit of risk. Lagercrantz Group AB is currently generating about 0.1 per unit of risk. If you would invest  0.27  in Hitech Development Wireless on October 20, 2024 and sell it today you would lose (0.13) from holding Hitech Development Wireless or give up 48.15% of portfolio value over 90 days.

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

Hitech Development Wireless  vs.  Lagercrantz Group AB

Hitech Development

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hitech Development Wireless are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Lagercrantz Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lagercrantz Group AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Lagercrantz Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hitech Development and Lagercrantz Group

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

The idea behind Hitech Development Wireless and Lagercrantz Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.