Correlation Between Hydract AS and Moens Bank

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

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

Diversification Opportunities for Hydract AS and Moens Bank

0.66

Correlation Coefficient

Hydract AS  Moens Bank

Poor diversification

The 3 months correlation between Hydract and Moens is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hydract AS and Moens Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moens Bank AS and Hydract AS 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 Hydract AS are associated (or correlated) with Moens Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moens Bank AS has no effect on the direction of Hydract AS i.e., Hydract AS and Moens Bank go up and down completely randomly.

Pair Corralation between Hydract AS and Moens Bank

Assuming the 90 days trading horizon Hydract AS is expected to generate 16.37 times more return on investment than Moens Bank. However, Hydract AS is 16.37 times more volatile than Moens Bank AS. It trades about 0.03 of its potential returns per unit of risk. Moens Bank AS is currently generating about -0.03 per unit of risk. If you would invest  126.00  in Hydract AS on September 12, 2024 and sell it today you would lose (86.00) from holding Hydract AS or give up 68.25% of portfolio value over 90 days.

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

Hydract AS  vs.  Moens Bank AS

Hydract AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hydract AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Hydract AS sustained solid returns over the last few months and may actually be approaching a breakup point.

Moens Bank AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moens Bank AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Moens Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hydract AS and Moens Bank

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

The idea behind Hydract AS and Moens Bank AS 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.