Correlation Between Hanza AB and BIMobject

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

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

Diversification Opportunities for Hanza AB and BIMobject

-0.69

Correlation Coefficient

Hanza AB  BIMobject

Excellent diversification

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

Pair Corralation between Hanza AB and BIMobject

Assuming the 90 days trading horizon Hanza AB is expected to generate 0.8 times more return on investment than BIMobject. However, Hanza AB is 1.26 times less risky than BIMobject. It trades about 0.1 of its potential returns per unit of risk. BIMobject AB is currently generating about 0.02 per unit of risk. If you would invest  5,633  in Hanza AB on February 20, 2024 and sell it today you would earn a total of  192.00  from holding Hanza AB or generate 3.41% return on investment over 90 days.

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

Hanza AB  vs.  BIMobject 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 weak 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.

BIMobject AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BIMobject AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, BIMobject is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hanza AB and BIMobject

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

The idea behind Hanza AB and BIMobject 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.