Correlation Between Royal Unibrew and HH International

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

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

Diversification Opportunities for Royal Unibrew and HH International

0.82

Correlation Coefficient

Royal Unibrew  HH International

Very poor diversification

The 3 months correlation between Royal and HH International is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Royal Unibrew AS and HH International AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HH International and Royal Unibrew 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 Royal Unibrew AS are associated (or correlated) with HH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HH International has no effect on the direction of Royal Unibrew i.e., Royal Unibrew and HH International go up and down completely randomly.

Pair Corralation between Royal Unibrew and HH International

Assuming the 90 days trading horizon Royal Unibrew AS is expected to generate 1.03 times more return on investment than HH International. However, Royal Unibrew is 1.03 times more volatile than HH International AS. It trades about -0.09 of its potential returns per unit of risk. HH International AS is currently generating about -0.19 per unit of risk. If you would invest  56,943  in Royal Unibrew AS on September 12, 2024 and sell it today you would lose (4,693) from holding Royal Unibrew AS or give up 8.24% of portfolio value over 90 days.

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

Royal Unibrew AS  vs.  HH International AS

Royal Unibrew AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Unibrew AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

HH International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HH International AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Royal Unibrew and HH International

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

The idea behind Royal Unibrew AS and HH International 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.