Correlation Between Stellar and Hexagon AB

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

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

Diversification Opportunities for Stellar and Hexagon AB

-0.63

Correlation Coefficient

Stellar  Hexagon AB

Excellent diversification

The 3 months correlation between Stellar and Hexagon is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Hexagon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon AB and Stellar 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 Stellar are associated (or correlated) with Hexagon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon AB has no effect on the direction of Stellar i.e., Stellar and Hexagon AB go up and down completely randomly.

Pair Corralation between Stellar and Hexagon AB

Assuming the 90 days trading horizon Stellar is expected to generate 1.28 times less return on investment than Hexagon AB. In addition to that, Stellar is 2.78 times more volatile than Hexagon AB. It trades about 0.04 of its total potential returns per unit of risk. Hexagon AB is currently generating about 0.13 per unit of volatility. If you would invest  895.00  in Hexagon AB on October 9, 2024 and sell it today you would earn a total of  58.00  from holding Hexagon AB or generate 6.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Stellar  vs.  Hexagon AB

Stellar

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hexagon AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hexagon AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Hexagon AB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Stellar and Hexagon AB

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

The idea behind Stellar and Hexagon 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.