Correlation Between Hanza AB and Avensia Publ

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

By analyzing existing cross correlation between Hanza AB and Avensia publ AB, you can compare the effects of market volatilities on Hanza AB and Avensia Publ 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 Hanza AB with a short position of Avensia Publ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanza AB and Avensia Publ.

Diversification Opportunities for Hanza AB and Avensia Publ

-0.22

Correlation Coefficient

Hanza AB  Avensia Publ

Very good diversification

The 3 months correlation between Hanza and Avensia is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hanza AB and Avensia publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avensia publ AB and Hanza 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 Hanza AB are associated (or correlated) with Avensia Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avensia publ AB has no effect on the direction of Hanza AB i.e., Hanza AB and Avensia Publ go up and down completely randomly.

Pair Corralation between Hanza AB and Avensia Publ

Assuming the 90 days trading horizon Hanza AB is expected to under-perform the Avensia Publ. But the stock apears to be less risky and, when comparing its historical volatility, Hanza AB is 1.49 times less risky than Avensia Publ. The stock trades about -0.06 of its potential returns per unit of risk. The Avensia publ AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  752.00  in Avensia publ AB on February 20, 2024 and sell it today you would earn a total of  70.00  from holding Avensia publ AB or generate 9.31% return on investment over 90 days.

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

Hanza AB  vs.  Avensia publ AB

Hanza AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanza AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Avensia publ AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Avensia publ AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Avensia Publ may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Hanza AB and Avensia Publ

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

The idea behind Hanza AB and Avensia publ AB 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.