Correlation Between Hexagon AB and Novanta
Can any of the company-specific risk be diversified away by investing in both Hexagon AB and Novanta 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 Novanta 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 Novanta, you can compare the effects of market volatilities on Hexagon AB and Novanta 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 Novanta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexagon AB and Novanta.
Diversification Opportunities for Hexagon AB and Novanta
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hexagon and Novanta is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hexagon AB ADR and Novanta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novanta 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 Novanta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novanta has no effect on the direction of Hexagon AB i.e., Hexagon AB and Novanta go up and down completely randomly.
Pair Corralation between Hexagon AB and Novanta
Assuming the 90 days horizon Hexagon AB ADR is expected to generate 0.67 times more return on investment than Novanta. However, Hexagon AB ADR is 1.5 times less risky than Novanta. It trades about -0.06 of its potential returns per unit of risk. Novanta is currently generating about -0.11 per unit of risk. If you would invest 1,160 in Hexagon AB ADR on December 5, 2024 and sell it today you would lose (23.00) from holding Hexagon AB ADR or give up 1.98% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hexagon AB ADR vs. Novanta
Performance |
Timeline |
Hexagon AB ADR |
Novanta |
Hexagon AB and Novanta Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hexagon AB and Novanta
The main advantage of trading using opposite Hexagon AB and Novanta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexagon AB position performs unexpectedly, Novanta 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 Novanta will offset losses from the drop in Novanta's long position.Hexagon AB vs. Novanta | Hexagon AB vs. Fortive Corp | Hexagon AB vs. Vishay Precision Group | Hexagon AB vs. Itron Inc |
Novanta vs. Mesa Laboratories | Novanta vs. Itron Inc | Novanta vs. Fortive Corp | Novanta vs. Vishay Precision Group |
Check out your portfolio center.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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