Correlation Between Kraft Bank and Hoegh Autoliners

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

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

Diversification Opportunities for Kraft Bank and Hoegh Autoliners

0.05

Correlation Coefficient

Kraft Bank  Hoegh Autoliners

Significant diversification

The 3 months correlation between Kraft and Hoegh is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Bank Asa and Hoegh Autoliners ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoegh Autoliners ASA and Kraft Bank 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 Kraft Bank Asa are associated (or correlated) with Hoegh Autoliners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoegh Autoliners ASA has no effect on the direction of Kraft Bank i.e., Kraft Bank and Hoegh Autoliners go up and down completely randomly.

Pair Corralation between Kraft Bank and Hoegh Autoliners

Assuming the 90 days trading horizon Kraft Bank is expected to generate 10.34 times less return on investment than Hoegh Autoliners. But when comparing it to its historical volatility, Kraft Bank Asa is 1.45 times less risky than Hoegh Autoliners. It trades about 0.0 of its potential returns per unit of risk. Hoegh Autoliners ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10,029  in Hoegh Autoliners ASA on October 26, 2024 and sell it today you would earn a total of  611.00  from holding Hoegh Autoliners ASA or generate 6.09% return on investment over 90 days.

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

Kraft Bank Asa  vs.  Hoegh Autoliners ASA

Kraft Bank Asa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kraft Bank Asa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Hoegh Autoliners ASA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kraft Bank and Hoegh Autoliners

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

The idea behind Kraft Bank Asa and Hoegh Autoliners ASA 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.