Correlation Between NCAB and Hexatronic Group

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

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

Diversification Opportunities for NCAB and Hexatronic Group

0.8

Correlation Coefficient

NCAB  Hexatronic Group

Very poor diversification

The 3 months correlation between NCAB and Hexatronic is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NCAB Group and Hexatronic Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexatronic Group and NCAB 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 NCAB Group are associated (or correlated) with Hexatronic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexatronic Group has no effect on the direction of NCAB i.e., NCAB and Hexatronic Group go up and down completely randomly.

Pair Corralation between NCAB and Hexatronic Group

Assuming the 90 days trading horizon NCAB Group is expected to generate 0.76 times more return on investment than Hexatronic Group. However, NCAB Group is 1.32 times less risky than Hexatronic Group. It trades about -0.15 of its potential returns per unit of risk. Hexatronic Group AB is currently generating about -0.17 per unit of risk. If you would invest  7,435  in NCAB Group on September 3, 2024 and sell it today you would lose (1,730) from holding NCAB Group or give up 23.27% of portfolio value over 90 days.

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

NCAB Group  vs.  Hexatronic Group AB

NCAB Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCAB Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hexatronic Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hexatronic Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with NCAB and Hexatronic Group

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

The idea behind NCAB Group and Hexatronic Group AB 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.