Correlation Between Hexatronic Group and Dedicare

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

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

Diversification Opportunities for Hexatronic Group and Dedicare

0.88

Correlation Coefficient

Hexatronic Group  Dedicare

Very poor diversification

The 3 months correlation between Hexatronic and Dedicare is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hexatronic Group AB and Dedicare AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dedicare AB and Hexatronic Group 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 Hexatronic Group AB are associated (or correlated) with Dedicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dedicare AB has no effect on the direction of Hexatronic Group i.e., Hexatronic Group and Dedicare go up and down completely randomly.

Pair Corralation between Hexatronic Group and Dedicare

Assuming the 90 days trading horizon Hexatronic Group AB is expected to under-perform the Dedicare. In addition to that, Hexatronic Group is 1.79 times more volatile than Dedicare AB. It trades about -0.19 of its total potential returns per unit of risk. Dedicare AB is currently generating about -0.12 per unit of volatility. If you would invest  7,010  in Dedicare AB on August 31, 2024 and sell it today you would lose (1,040) from holding Dedicare AB or give up 14.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Hexatronic Group AB  vs.  Dedicare AB

Hexatronic Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hexatronic Group 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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Dedicare AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dedicare AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hexatronic Group and Dedicare

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

The idea behind Hexatronic Group AB and Dedicare 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.