Correlation Between Hexcel and A2Z Smart

Can any of the company-specific risk be diversified away by investing in both Hexcel and A2Z Smart 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 Hexcel and A2Z Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hexcel and A2Z Smart Technologies, you can compare the effects of market volatilities on Hexcel and A2Z Smart 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 Hexcel with a short position of A2Z Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexcel and A2Z Smart.

Diversification Opportunities for Hexcel and A2Z Smart

0.0

Correlation Coefficient

Hexcel  A2Z Smart

Pay attention - limited upside

The 3 months correlation between Hexcel and A2Z is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hexcel and A2Z Smart Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A2Z Smart Technologies and Hexcel 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 Hexcel are associated (or correlated) with A2Z Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A2Z Smart Technologies has no effect on the direction of Hexcel i.e., Hexcel and A2Z Smart go up and down completely randomly.

Pair Corralation between Hexcel and A2Z Smart

Considering the 90-day investment horizon Hexcel is expected to generate 12836.5 times less return on investment than A2Z Smart. But when comparing it to its historical volatility, Hexcel is 5.09 times less risky than A2Z Smart. It trades about 0.0 of its potential returns per unit of risk. A2Z Smart Technologies is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  160.00  in A2Z Smart Technologies on August 30, 2024 and sell it today you would earn a total of  504.00  from holding A2Z Smart Technologies or generate 315.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Hexcel  vs.  A2Z Smart Technologies

Hexcel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hexcel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Hexcel is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

A2Z Smart Technologies

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in A2Z Smart Technologies are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, A2Z Smart showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hexcel and A2Z Smart

The main advantage of trading using opposite Hexcel and A2Z Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexcel position performs unexpectedly, A2Z Smart 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 A2Z Smart will offset losses from the drop in A2Z Smart's long position.

The idea behind Hexcel and A2Z Smart 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.