Correlation Between Hexagon AB and Garmin

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

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

Diversification Opportunities for Hexagon AB and Garmin

-0.69

Correlation Coefficient

Hexagon AB  Garmin

Excellent diversification

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

Pair Corralation between Hexagon AB and Garmin

Assuming the 90 days horizon Hexagon AB ADR is expected to under-perform the Garmin. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hexagon AB ADR is 1.2 times less risky than Garmin. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Garmin is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12,473  in Garmin on September 12, 2024 and sell it today you would earn a total of  9,613  from holding Garmin or generate 77.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Hexagon AB ADR  vs.  Garmin

Hexagon AB ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hexagon AB ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, Hexagon AB is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Garmin

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Garmin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hexagon AB and Garmin

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

The idea behind Hexagon AB ADR and Garmin 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.