Correlation Between Hub and DSV Panalpina

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

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

Diversification Opportunities for Hub and DSV Panalpina

-0.39

Correlation Coefficient

Hub  DSV Panalpina

Very good diversification

The 3 months correlation between Hub and DSV is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hub Group and DSV Panalpina AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV Panalpina AS and Hub 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 Hub Group are associated (or correlated) with DSV Panalpina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV Panalpina AS has no effect on the direction of Hub i.e., Hub and DSV Panalpina go up and down completely randomly.

Pair Corralation between Hub and DSV Panalpina

Given the investment horizon of 90 days Hub is expected to generate 4.63 times less return on investment than DSV Panalpina. In addition to that, Hub is 1.2 times more volatile than DSV Panalpina AS. It trades about 0.02 of its total potential returns per unit of risk. DSV Panalpina AS is currently generating about 0.13 per unit of volatility. If you would invest  8,287  in DSV Panalpina AS on September 29, 2024 and sell it today you would earn a total of  2,540  from holding DSV Panalpina AS or generate 30.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Hub Group  vs.  DSV Panalpina AS

Hub Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hub Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Hub is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

DSV Panalpina AS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, DSV Panalpina is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hub and DSV Panalpina

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

The idea behind Hub Group and DSV Panalpina 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.