Correlation Between Hydratec Industries and NV Nederlandsche

Can any of the company-specific risk be diversified away by investing in both Hydratec Industries and NV Nederlandsche 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 NV Nederlandsche 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 NV Nederlandsche Apparatenfabriek, you can compare the effects of market volatilities on Hydratec Industries and NV Nederlandsche 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 NV Nederlandsche. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydratec Industries and NV Nederlandsche.

Diversification Opportunities for Hydratec Industries and NV Nederlandsche

0.51

Correlation Coefficient

Hydratec Industries  NV Nederlandsche

Very weak diversification

The 3 months correlation between Hydratec and NEDAP is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hydratec Industries NV and NV Nederlandsche Apparatenfabr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Nederlandsche App 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 NV Nederlandsche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Nederlandsche App has no effect on the direction of Hydratec Industries i.e., Hydratec Industries and NV Nederlandsche go up and down completely randomly.

Pair Corralation between Hydratec Industries and NV Nederlandsche

Assuming the 90 days trading horizon Hydratec Industries is expected to generate 1.89 times less return on investment than NV Nederlandsche. In addition to that, Hydratec Industries is 1.55 times more volatile than NV Nederlandsche Apparatenfabriek. It trades about 0.05 of its total potential returns per unit of risk. NV Nederlandsche Apparatenfabriek is currently generating about 0.16 per unit of volatility. If you would invest  5,320  in NV Nederlandsche Apparatenfabriek on December 5, 2024 and sell it today you would earn a total of  600.00  from holding NV Nederlandsche Apparatenfabriek or generate 11.28% return on investment over 90 days.

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

Hydratec Industries NV  vs.  NV Nederlandsche Apparatenfabr

Hydratec Industries

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hydratec Industries NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

NV Nederlandsche App

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NV Nederlandsche Apparatenfabriek are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NV Nederlandsche may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hydratec Industries and NV Nederlandsche

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

The idea behind Hydratec Industries NV and NV Nederlandsche Apparatenfabriek 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.