Correlation Between Transtema Group and Hexatronic Group

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

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

Diversification Opportunities for Transtema Group and Hexatronic Group

0.32

Correlation Coefficient

Transtema Group  Hexatronic Group

Weak diversification

The 3 months correlation between Transtema and Hexatronic is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Transtema Group AB and Hexatronic Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexatronic Group and Transtema Group 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 Transtema Group AB 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 Transtema Group i.e., Transtema Group and Hexatronic Group go up and down completely randomly.

Pair Corralation between Transtema Group and Hexatronic Group

Assuming the 90 days trading horizon Transtema Group AB is expected to generate 0.89 times more return on investment than Hexatronic Group. However, Transtema Group AB is 1.12 times less risky than Hexatronic Group. It trades about -0.01 of its potential returns per unit of risk. Hexatronic Group AB is currently generating about -0.14 per unit of risk. If you would invest  1,510  in Transtema Group AB on October 26, 2024 and sell it today you would lose (52.00) from holding Transtema Group AB or give up 3.44% of portfolio value over 90 days.

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

Transtema Group AB  vs.  Hexatronic Group AB

Transtema Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transtema Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Transtema Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the 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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Transtema Group and Hexatronic Group

The main advantage of trading using opposite Transtema Group and Hexatronic Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transtema Group 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 Transtema Group AB 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 Global Correlations module to find global opportunities by holding instruments from different markets.