Correlation Between Hanza AB and Advenica

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

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

Diversification Opportunities for Hanza AB and Advenica

-0.69

Correlation Coefficient

Hanza AB  Advenica

Excellent diversification

The 3 months correlation between Hanza and Advenica is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hanza AB and Advenica AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advenica AB and Hanza AB 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 Hanza AB are associated (or correlated) with Advenica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advenica AB has no effect on the direction of Hanza AB i.e., Hanza AB and Advenica go up and down completely randomly.

Pair Corralation between Hanza AB and Advenica

Assuming the 90 days trading horizon Hanza AB is expected to generate 0.6 times more return on investment than Advenica. However, Hanza AB is 1.68 times less risky than Advenica. It trades about 0.05 of its potential returns per unit of risk. Advenica AB is currently generating about 0.03 per unit of risk. If you would invest  4,871  in Hanza AB on September 14, 2024 and sell it today you would earn a total of  2,509  from holding Hanza AB or generate 51.51% return on investment over 90 days.

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

Hanza AB  vs.  Advenica AB

Hanza AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hanza AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hanza AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Advenica AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advenica AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hanza AB and Advenica

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

The idea behind Hanza AB and Advenica 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.