Correlation Between HMS Networks and Beijer Ref

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

By analyzing existing cross correlation between HMS Networks AB and Beijer Ref AB, you can compare the effects of market volatilities on HMS Networks and Beijer Ref 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 HMS Networks with a short position of Beijer Ref. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMS Networks and Beijer Ref.

Diversification Opportunities for HMS Networks and Beijer Ref

0.46

Correlation Coefficient

HMS Networks  Beijer Ref

Very weak diversification

The 3 months correlation between HMS and Beijer is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding HMS Networks AB and Beijer Ref AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijer Ref AB and HMS Networks 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 HMS Networks AB are associated (or correlated) with Beijer Ref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijer Ref AB has no effect on the direction of HMS Networks i.e., HMS Networks and Beijer Ref go up and down completely randomly.

Pair Corralation between HMS Networks and Beijer Ref

Assuming the 90 days trading horizon HMS Networks AB is expected to generate 1.24 times more return on investment than Beijer Ref. However, HMS Networks is 1.24 times more volatile than Beijer Ref AB. It trades about 0.04 of its potential returns per unit of risk. Beijer Ref AB is currently generating about -0.11 per unit of risk. If you would invest  43,380  in HMS Networks AB on December 30, 2024 and sell it today you would earn a total of  1,780  from holding HMS Networks AB or generate 4.1% return on investment over 90 days.

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

HMS Networks AB  vs.  Beijer Ref AB

HMS Networks AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HMS Networks AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, HMS Networks is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Beijer Ref AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beijer Ref AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with HMS Networks and Beijer Ref

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

The idea behind HMS Networks AB and Beijer Ref 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 Commodity Directory module to find actively traded commodities issued by global exchanges.