Correlation Between H M and FastPartner
Can any of the company-specific risk be diversified away by investing in both H M and FastPartner 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 H M and FastPartner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H M Hennes and FastPartner AB, you can compare the effects of market volatilities on H M and FastPartner 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 H M with a short position of FastPartner. Check out your portfolio center. Please also check ongoing floating volatility patterns of H M and FastPartner.
Diversification Opportunities for H M and FastPartner
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HM-B and FastPartner is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes and FastPartner AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FastPartner AB and H M 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 H M Hennes are associated (or correlated) with FastPartner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FastPartner AB has no effect on the direction of H M i.e., H M and FastPartner go up and down completely randomly.
Pair Corralation between H M and FastPartner
Assuming the 90 days trading horizon H M Hennes is expected to generate 0.79 times more return on investment than FastPartner. However, H M Hennes is 1.27 times less risky than FastPartner. It trades about 0.07 of its potential returns per unit of risk. FastPartner AB is currently generating about -0.03 per unit of risk. If you would invest 15,373 in H M Hennes on September 8, 2024 and sell it today you would earn a total of 917.00 from holding H M Hennes or generate 5.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.48% |
Values | Daily Returns |
H M Hennes vs. FastPartner AB
Performance |
Timeline |
H M Hennes |
FastPartner AB |
H M and FastPartner Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with H M and FastPartner
The main advantage of trading using opposite H M and FastPartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H M position performs unexpectedly, FastPartner 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 FastPartner will offset losses from the drop in FastPartner's long position.H M vs. Telefonaktiebolaget LM Ericsson | H M vs. Swedbank AB | H M vs. AB Electrolux | H M vs. Investor AB ser |
FastPartner vs. Atrium Ljungberg AB | FastPartner vs. Platzer Fastigheter Holding | FastPartner vs. Nyfosa AB | FastPartner vs. Fabege AB |
Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |