Correlation Between Hydrogen Engine and Signify NV

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

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

Diversification Opportunities for Hydrogen Engine and Signify NV

-0.18

Correlation Coefficient

Hydrogen Engine  Signify NV

Good diversification

The 3 months correlation between Hydrogen and Signify is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hydrogen Engine Center and Signify NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signify NV and Hydrogen Engine 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 Hydrogen Engine Center are associated (or correlated) with Signify NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signify NV has no effect on the direction of Hydrogen Engine i.e., Hydrogen Engine and Signify NV go up and down completely randomly.

Pair Corralation between Hydrogen Engine and Signify NV

Given the investment horizon of 90 days Hydrogen Engine Center is expected to generate 61.67 times more return on investment than Signify NV. However, Hydrogen Engine is 61.67 times more volatile than Signify NV. It trades about 0.19 of its potential returns per unit of risk. Signify NV is currently generating about -0.03 per unit of risk. If you would invest  0.65  in Hydrogen Engine Center on November 29, 2024 and sell it today you would earn a total of  3.95  from holding Hydrogen Engine Center or generate 607.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Hydrogen Engine Center  vs.  Signify NV

Hydrogen Engine Center

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hydrogen Engine Center are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Hydrogen Engine reported solid returns over the last few months and may actually be approaching a breakup point.

Signify NV

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Hydrogen Engine and Signify NV

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

The idea behind Hydrogen Engine Center and Signify 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.