Correlation Between Idogen AB and Hitech Development

Can any of the company-specific risk be diversified away by investing in both Idogen AB and Hitech Development 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 Idogen AB and Hitech Development into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Idogen AB and Hitech Development Wireless, you can compare the effects of market volatilities on Idogen AB and Hitech Development 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 Idogen AB with a short position of Hitech Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Idogen AB and Hitech Development.

Diversification Opportunities for Idogen AB and Hitech Development

0.0

Correlation Coefficient

Idogen AB  Hitech Development

Pay attention - limited upside

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

Pair Corralation between Idogen AB and Hitech Development

Assuming the 90 days trading horizon Idogen AB is expected to generate 2.45 times more return on investment than Hitech Development. However, Idogen AB is 2.45 times more volatile than Hitech Development Wireless. It trades about 0.03 of its potential returns per unit of risk. Hitech Development Wireless is currently generating about -0.04 per unit of risk. If you would invest  18.00  in Idogen AB on October 5, 2024 and sell it today you would lose (6.00) from holding Idogen AB or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Idogen AB  vs.  Hitech Development Wireless

Idogen AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hitech Development

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Hitech Development Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Hitech Development unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Idogen AB and Hitech Development

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

The idea behind Idogen AB and Hitech Development Wireless 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.