Correlation Between XRP and Hexagon AB

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

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

Diversification Opportunities for XRP and Hexagon AB

-0.4

Correlation Coefficient

XRP  Hexagon AB

Very good diversification

The 3 months correlation between XRP and Hexagon is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Hexagon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon AB and XRP 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 XRP 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 XRP i.e., XRP and Hexagon AB go up and down completely randomly.

Pair Corralation between XRP and Hexagon AB

Assuming the 90 days trading horizon XRP is expected to generate 1.73 times less return on investment than Hexagon AB. In addition to that, XRP is 1.64 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	Very Weak
Accuracy	95.0%
Values	Daily Returns

XRP  vs.  Hexagon AB

XRP

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, XRP 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 XRP and Hexagon AB

The main advantage of trading using opposite XRP and Hexagon AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP 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 XRP 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.