Correlation Between H M and Raketech Group
Can any of the company-specific risk be diversified away by investing in both H M and Raketech Group 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 Raketech Group 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 Raketech Group Holding, you can compare the effects of market volatilities on H M and Raketech Group 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 Raketech Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of H M and Raketech Group.
Diversification Opportunities for H M and Raketech Group
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HM-B and Raketech is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes and Raketech Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raketech Group Holding 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 Raketech Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raketech Group Holding has no effect on the direction of H M i.e., H M and Raketech Group go up and down completely randomly.
Pair Corralation between H M and Raketech Group
Assuming the 90 days trading horizon H M Hennes is expected to generate 0.55 times more return on investment than Raketech Group. However, H M Hennes is 1.81 times less risky than Raketech Group. It trades about 0.35 of its potential returns per unit of risk. Raketech Group Holding is currently generating about -0.38 per unit of risk. If you would invest 16,760 in H M Hennes on March 9, 2024 and sell it today you would earn a total of 1,670 from holding H M Hennes or generate 9.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
H M Hennes vs. Raketech Group Holding
Performance |
Timeline |
H M Hennes |
Raketech Group Holding |
H M and Raketech Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with H M and Raketech Group
The main advantage of trading using opposite H M and Raketech Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H M position performs unexpectedly, Raketech Group 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 Raketech Group will offset losses from the drop in Raketech Group'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 |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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