Correlation Between Brd Klee and Hydract AS

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

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

Diversification Opportunities for Brd Klee and Hydract AS

-0.08

Correlation Coefficient

Brd Klee  Hydract AS

Good diversification

The 3 months correlation between Brd and Hydract is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Brd Klee AS and Hydract AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydract AS and Brd Klee 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 Brd Klee AS are associated (or correlated) with Hydract AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydract AS has no effect on the direction of Brd Klee i.e., Brd Klee and Hydract AS go up and down completely randomly.

Pair Corralation between Brd Klee and Hydract AS

Assuming the 90 days trading horizon Brd Klee is expected to generate 3.2 times less return on investment than Hydract AS. But when comparing it to its historical volatility, Brd Klee AS is 3.09 times less risky than Hydract AS. It trades about 0.06 of its potential returns per unit of risk. Hydract AS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  58.00  in Hydract AS on December 2, 2024 and sell it today you would earn a total of  2.00  from holding Hydract AS or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.12%
Values	Daily Returns

Brd Klee AS  vs.  Hydract AS

Brd Klee AS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brd Klee AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Brd Klee sustained solid returns over the last few months and may actually be approaching a breakup point.

Hydract AS

Risk-Adjusted Performance

OK

Over the last 90 days Hydract AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unfluctuating fundamental indicators, Hydract AS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brd Klee and Hydract AS

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

The idea behind Brd Klee AS and Hydract 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.