Correlation Between Vow ASA and Hexagon Purus

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

By analyzing existing cross correlation between Vow ASA and Hexagon Purus As, you can compare the effects of market volatilities on Vow ASA and Hexagon Purus 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 Vow ASA with a short position of Hexagon Purus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and Hexagon Purus.

Diversification Opportunities for Vow ASA and Hexagon Purus

0.15

Correlation Coefficient

Vow ASA  Hexagon Purus

Average diversification

The 3 months correlation between Vow and Hexagon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and Hexagon Purus As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon Purus As and Vow ASA 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 Vow ASA are associated (or correlated) with Hexagon Purus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon Purus As has no effect on the direction of Vow ASA i.e., Vow ASA and Hexagon Purus go up and down completely randomly.

Pair Corralation between Vow ASA and Hexagon Purus

Assuming the 90 days trading horizon Vow ASA is expected to generate 3.37 times less return on investment than Hexagon Purus. But when comparing it to its historical volatility, Vow ASA is 1.56 times less risky than Hexagon Purus. It trades about 0.11 of its potential returns per unit of risk. Hexagon Purus As is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  693.00  in Hexagon Purus As on March 17, 2024 and sell it today you would earn a total of  190.00  from holding Hexagon Purus As or generate 27.42% return on investment over 90 days.

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

Vow ASA  vs.  Hexagon Purus As

Vow ASA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vow ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Vow ASA may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Hexagon Purus As

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hexagon Purus As are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Hexagon Purus disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vow ASA and Hexagon Purus

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

The idea behind Vow ASA and Hexagon Purus As 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.