Correlation Between HH International and Target
Can any of the company-specific risk be diversified away by investing in both HH International and Target 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 HH International and Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HH International AS and Target, you can compare the effects of market volatilities on HH International and Target 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 HH International with a short position of Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of HH International and Target.
Diversification Opportunities for HH International and Target
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HH International and Target is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding HH International AS and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and HH International 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 HH International AS are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of HH International i.e., HH International and Target go up and down completely randomly.
Pair Corralation between HH International and Target
Assuming the 90 days horizon HH International AS is expected to under-perform the Target. But the stock apears to be less risky and, when comparing its historical volatility, HH International AS is 1.25 times less risky than Target. The stock trades about -0.16 of its potential returns per unit of risk. The Target is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 13,933 in Target on January 20, 2024 and sell it today you would earn a total of 2,725 from holding Target or generate 19.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HH International AS vs. Target
Performance |
| Timeline |
| HH International |
| Target |
HH International and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HH International and Target
The main advantage of trading using opposite HH International and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HH International position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| HH International vs. Per Aarsleff Holding | HH International vs. Matas AS | HH International vs. DFDS AS | HH International vs. ALK Abell AS |
| Target vs. Aquagold International | Target vs. Morningstar Unconstrained Allocation | Target vs. Thrivent High Yield | Target vs. Via Renewables |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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