Correlation Between Hexagon AB and Beowulf Mining

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

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

Diversification Opportunities for Hexagon AB and Beowulf Mining

0.42

Correlation Coefficient

Hexagon AB  Beowulf Mining

Very weak diversification

The 3 months correlation between Hexagon and Beowulf is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hexagon AB and Beowulf Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beowulf Mining PLC and Hexagon 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 Hexagon AB are associated (or correlated) with Beowulf Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beowulf Mining PLC has no effect on the direction of Hexagon AB i.e., Hexagon AB and Beowulf Mining go up and down completely randomly.

Pair Corralation between Hexagon AB and Beowulf Mining

Assuming the 90 days trading horizon Hexagon AB is expected to generate 0.61 times more return on investment than Beowulf Mining. However, Hexagon AB is 1.64 times less risky than Beowulf Mining. It trades about 0.07 of its potential returns per unit of risk. Beowulf Mining PLC is currently generating about -0.28 per unit of risk. If you would invest  9,974  in Hexagon AB on September 12, 2024 and sell it today you would earn a total of  866.00  from holding Hexagon AB or generate 8.68% return on investment over 90 days.

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

Hexagon AB  vs.  Beowulf Mining PLC

Hexagon AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hexagon AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hexagon AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Beowulf Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beowulf Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hexagon AB and Beowulf Mining

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

The idea behind Hexagon AB and Beowulf Mining PLC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.