Correlation Between Hexagon AB and Keysight Technologies

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

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

Diversification Opportunities for Hexagon AB and Keysight Technologies

-0.41

Correlation Coefficient

Hexagon AB  Keysight Technologies

Very good diversification

The 3 months correlation between Hexagon and Keysight is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hexagon AB and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies and Hexagon AB 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 AB are associated (or correlated) with Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of Hexagon AB i.e., Hexagon AB and Keysight Technologies go up and down completely randomly.

Pair Corralation between Hexagon AB and Keysight Technologies

Assuming the 90 days horizon Hexagon AB is expected to generate 1.85 times more return on investment than Keysight Technologies. However, Hexagon AB is 1.85 times more volatile than Keysight Technologies. It trades about 0.12 of its potential returns per unit of risk. Keysight Technologies is currently generating about -0.14 per unit of risk. If you would invest  895.00  in Hexagon AB on October 10, 2024 and sell it today you would earn a total of  58.00  from holding Hexagon AB or generate 6.48% return on investment over 90 days.

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

Hexagon AB  vs.  Keysight Technologies

Hexagon AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Keysight Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Keysight Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Keysight Technologies 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 Hexagon AB and Keysight Technologies

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

The idea behind Hexagon AB and Keysight Technologies 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.