Correlation Between H M and Niloerngruppen

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

By analyzing existing cross correlation between H M Hennes and Niloerngruppen AB Series, you can compare the effects of market volatilities on H M and Niloerngruppen 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 H M with a short position of Niloerngruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of H M and Niloerngruppen.

Diversification Opportunities for H M and Niloerngruppen

-0.49

Correlation Coefficient

H M  Niloerngruppen

Very good diversification

The 3 months correlation between HM-B and Niloerngruppen is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes and Niloerngruppen AB Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niloerngruppen AB Series and H M 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 H M Hennes are associated (or correlated) with Niloerngruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niloerngruppen AB Series has no effect on the direction of H M i.e., H M and Niloerngruppen go up and down completely randomly.

Pair Corralation between H M and Niloerngruppen

Assuming the 90 days trading horizon H M Hennes is expected to under-perform the Niloerngruppen. But the stock apears to be less risky and, when comparing its historical volatility, H M Hennes is 1.05 times less risky than Niloerngruppen. The stock trades about -0.05 of its potential returns per unit of risk. The Niloerngruppen AB Series is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,600  in Niloerngruppen AB Series on September 3, 2024 and sell it today you would earn a total of  180.00  from holding Niloerngruppen AB Series or generate 2.73% return on investment over 90 days.

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

H M Hennes  vs.  Niloerngruppen AB Series

H M Hennes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H M Hennes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, H M is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Niloerngruppen AB Series

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Niloerngruppen AB Series are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Niloerngruppen is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with H M and Niloerngruppen

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

The idea behind H M Hennes and Niloerngruppen AB Series 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.