Correlation Between Hexagon AB and Sensata Technologies
Can any of the company-specific risk be diversified away by investing in both Hexagon AB and Sensata 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 Sensata Technologies 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 Sensata Technologies Holding, you can compare the effects of market volatilities on Hexagon AB and Sensata 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 Sensata Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexagon AB and Sensata Technologies.
Diversification Opportunities for Hexagon AB and Sensata Technologies
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hexagon and Sensata is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hexagon AB ADR and Sensata Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensata 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 ADR are associated (or correlated) with Sensata Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensata Technologies has no effect on the direction of Hexagon AB i.e., Hexagon AB and Sensata Technologies go up and down completely randomly.
Pair Corralation between Hexagon AB and Sensata Technologies
Assuming the 90 days horizon Hexagon AB ADR is expected to under-perform the Sensata Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hexagon AB ADR is 1.95 times less risky than Sensata Technologies. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Sensata Technologies Holding is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,550 in Sensata Technologies Holding on December 5, 2024 and sell it today you would earn a total of 103.00 from holding Sensata Technologies Holding or generate 4.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hexagon AB ADR vs. Sensata Technologies Holding
Performance |
Timeline |
Hexagon AB ADR |
Sensata Technologies |
Hexagon AB and Sensata Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hexagon AB and Sensata Technologies
The main advantage of trading using opposite Hexagon AB and Sensata Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexagon AB position performs unexpectedly, Sensata 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 Sensata Technologies will offset losses from the drop in Sensata Technologies' long position.Hexagon AB vs. Novanta | Hexagon AB vs. Fortive Corp | Hexagon AB vs. Vishay Precision Group | Hexagon AB vs. Itron Inc |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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