Correlation Between Nasdaq and Halma Plc

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

By analyzing existing cross correlation between Nasdaq Inc and Halma plc, you can compare the effects of market volatilities on Nasdaq and Halma Plc 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 Nasdaq with a short position of Halma Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Halma Plc.

Diversification Opportunities for Nasdaq and Halma Plc

0.68

Correlation Coefficient

Nasdaq  Halma Plc

Poor diversification

The 3 months correlation between Nasdaq and Halma is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Halma plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma plc and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Halma Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma plc has no effect on the direction of Nasdaq i.e., Nasdaq and Halma Plc go up and down completely randomly.

Pair Corralation between Nasdaq and Halma Plc

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Halma Plc. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 1.62 times less risky than Halma Plc. The stock trades about -0.01 of its potential returns per unit of risk. The Halma plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,473  in Halma plc on December 25, 2024 and sell it today you would earn a total of  0.00  from holding Halma plc or generate 0.0% return on investment over 90 days.

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

Nasdaq Inc  vs.  Halma plc

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Halma plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Halma plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Halma Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nasdaq and Halma Plc

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

The idea behind Nasdaq Inc and Halma plc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.