Correlation Between Hexagon AB and Global Warming

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

By analyzing existing cross correlation between Hexagon AB ADR and Global Warming Solut, you can compare the effects of market volatilities on Hexagon AB and Global Warming 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 Global Warming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexagon AB and Global Warming.

Diversification Opportunities for Hexagon AB and Global Warming

-0.75

Correlation Coefficient

Hexagon AB  Global Warming

Pay attention - limited upside

The 3 months correlation between Hexagon and Global is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hexagon AB ADR and Global Warming Solut in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Warming Solut 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 ADR are associated (or correlated) with Global Warming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Warming Solut has no effect on the direction of Hexagon AB i.e., Hexagon AB and Global Warming go up and down completely randomly.

Pair Corralation between Hexagon AB and Global Warming

Assuming the 90 days horizon Hexagon AB ADR is expected to generate 0.17 times more return on investment than Global Warming. However, Hexagon AB ADR is 6.03 times less risky than Global Warming. It trades about 0.12 of its potential returns per unit of risk. Global Warming Solut is currently generating about -0.02 per unit of risk. If you would invest  965.00  in Hexagon AB ADR on December 26, 2024 and sell it today you would earn a total of  137.00  from holding Hexagon AB ADR or generate 14.2% return on investment over 90 days.

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

Hexagon AB ADR  vs.  Global Warming Solut

Hexagon AB ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hexagon AB ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, Hexagon AB showed solid returns over the last few months and may actually be approaching a breakup point.

Global Warming Solut

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Warming Solut has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hexagon AB and Global Warming

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

The idea behind Hexagon AB ADR and Global Warming Solut 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.