Correlation Between Hexagon Composites and Vow Green

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

By analyzing existing cross correlation between Hexagon Composites ASA and Vow Green Metals, you can compare the effects of market volatilities on Hexagon Composites and Vow Green 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 Hexagon Composites with a short position of Vow Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexagon Composites and Vow Green.

Diversification Opportunities for Hexagon Composites and Vow Green

0.03

Correlation Coefficient

Hexagon Composites  Vow Green

Significant diversification

The 3 months correlation between Hexagon and Vow is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hexagon Composites ASA and Vow Green Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vow Green Metals and Hexagon Composites 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 Hexagon Composites ASA are associated (or correlated) with Vow Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vow Green Metals has no effect on the direction of Hexagon Composites i.e., Hexagon Composites and Vow Green go up and down completely randomly.

Pair Corralation between Hexagon Composites and Vow Green

Assuming the 90 days trading horizon Hexagon Composites ASA is expected to under-perform the Vow Green. But the stock apears to be less risky and, when comparing its historical volatility, Hexagon Composites ASA is 2.36 times less risky than Vow Green. The stock trades about -0.35 of its potential returns per unit of risk. The Vow Green Metals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  69.00  in Vow Green Metals on December 29, 2024 and sell it today you would earn a total of  31.00  from holding Vow Green Metals or generate 44.93% return on investment over 90 days.

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

Hexagon Composites ASA  vs.  Vow Green Metals

Hexagon Composites ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hexagon Composites ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Vow Green Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vow Green Metals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting primary indicators, Vow Green disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hexagon Composites and Vow Green

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

The idea behind Hexagon Composites ASA and Vow Green Metals 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.