Correlation Between Hydract AS and Royal Unibrew

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

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

Diversification Opportunities for Hydract AS and Royal Unibrew

0.65

Correlation Coefficient

Hydract AS  Royal Unibrew

Poor diversification

The 3 months correlation between Hydract and Royal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hydract AS and Royal Unibrew AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Unibrew 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 Royal Unibrew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Unibrew AS has no effect on the direction of Hydract AS i.e., Hydract AS and Royal Unibrew go up and down completely randomly.

Pair Corralation between Hydract AS and Royal Unibrew

Assuming the 90 days trading horizon Hydract AS is expected to generate 12.8 times more return on investment than Royal Unibrew. However, Hydract AS is 12.8 times more volatile than Royal Unibrew AS. It trades about 0.04 of its potential returns per unit of risk. Royal Unibrew AS is currently generating about -0.02 per unit of risk. If you would invest  131.00  in Hydract AS on September 3, 2024 and sell it today you would lose (85.00) from holding Hydract AS or give up 64.89% 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.  Royal Unibrew AS

Hydract AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hydract AS are ranked lower than 3 (%) 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.

Royal Unibrew AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Unibrew AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Royal Unibrew is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hydract AS and Royal Unibrew

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

The idea behind Hydract AS and Royal Unibrew 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.