Correlation Between Hydratec Industries and DGB Group

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

By analyzing existing cross correlation between Hydratec Industries NV and DGB Group NV, you can compare the effects of market volatilities on Hydratec Industries and DGB Group 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 Hydratec Industries with a short position of DGB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydratec Industries and DGB Group.

Diversification Opportunities for Hydratec Industries and DGB Group

0.0

Correlation Coefficient

Hydratec Industries  DGB Group

Pay attention - limited upside

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

Pair Corralation between Hydratec Industries and DGB Group

If you would invest  67.00  in DGB Group NV on October 7, 2024 and sell it today you would earn a total of  18.00  from holding DGB Group NV or generate 26.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Hydratec Industries NV  vs.  DGB Group NV

Hydratec Industries

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Hydratec Industries NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hydratec Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DGB Group NV

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DGB Group NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, DGB Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hydratec Industries and DGB Group

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

The idea behind Hydratec Industries NV and DGB Group NV 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.