Correlation Between Hexagon AB and Vaisala Oyj

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

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

Diversification Opportunities for Hexagon AB and Vaisala Oyj

-0.38

Correlation Coefficient

Hexagon AB  Vaisala Oyj

Very good diversification

The 3 months correlation between Hexagon and Vaisala is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hexagon AB and Vaisala Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaisala Oyj 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 Vaisala Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaisala Oyj has no effect on the direction of Hexagon AB i.e., Hexagon AB and Vaisala Oyj go up and down completely randomly.

Pair Corralation between Hexagon AB and Vaisala Oyj

Assuming the 90 days horizon Hexagon AB is expected to under-perform the Vaisala Oyj. In addition to that, Hexagon AB is 2.33 times more volatile than Vaisala Oyj. It trades about -0.07 of its total potential returns per unit of risk. Vaisala Oyj is currently generating about 0.13 per unit of volatility. If you would invest  4,300  in Vaisala Oyj on September 5, 2024 and sell it today you would earn a total of  437.00  from holding Vaisala Oyj or generate 10.16% return on investment over 90 days.

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

Hexagon AB  vs.  Vaisala Oyj

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 abnormal performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Vaisala Oyj

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vaisala Oyj are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vaisala Oyj may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hexagon AB and Vaisala Oyj

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

The idea behind Hexagon AB and Vaisala Oyj 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.