Correlation Between HH International and Columbus

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

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

Diversification Opportunities for HH International and Columbus

0.48

Correlation Coefficient

HH International  Columbus

Very weak diversification

The 3 months correlation between HH International and Columbus is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding HH International AS and Columbus AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus AS and HH International 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 HH International AS are associated (or correlated) with Columbus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus AS has no effect on the direction of HH International i.e., HH International and Columbus go up and down completely randomly.

Pair Corralation between HH International and Columbus

Assuming the 90 days horizon HH International AS is expected to generate 0.74 times more return on investment than Columbus. However, HH International AS is 1.34 times less risky than Columbus. It trades about 0.21 of its potential returns per unit of risk. Columbus AS is currently generating about 0.15 per unit of risk. If you would invest  7,960  in HH International AS on December 2, 2024 and sell it today you would earn a total of  2,000  from holding HH International AS or generate 25.13% return on investment over 90 days.

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

HH International AS  vs.  Columbus AS

HH International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HH International AS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, HH International displayed solid returns over the last few months and may actually be approaching a breakup point.

Columbus AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbus AS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Columbus exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HH International and Columbus

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

The idea behind HH International AS and Columbus AS 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.