Correlation Between Hydratec Industries and Add Value

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

By analyzing existing cross correlation between Hydratec Industries NV and Add Value Fund, you can compare the effects of market volatilities on Hydratec Industries and Add Value 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 Hydratec Industries with a short position of Add Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydratec Industries and Add Value.

Diversification Opportunities for Hydratec Industries and Add Value

0.36

Correlation Coefficient

Hydratec Industries  Add Value

Weak diversification

The 3 months correlation between Hydratec and Add is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hydratec Industries NV and Add Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Add Value Fund and Hydratec Industries 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 Hydratec Industries NV are associated (or correlated) with Add Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Add Value Fund has no effect on the direction of Hydratec Industries i.e., Hydratec Industries and Add Value go up and down completely randomly.

Pair Corralation between Hydratec Industries and Add Value

Assuming the 90 days trading horizon Hydratec Industries NV is expected to under-perform the Add Value. In addition to that, Hydratec Industries is 1.12 times more volatile than Add Value Fund. It trades about 0.0 of its total potential returns per unit of risk. Add Value Fund is currently generating about 0.15 per unit of volatility. If you would invest  9,150  in Add Value Fund on May 2, 2025 and sell it today you would earn a total of  1,045  from holding Add Value Fund or generate 11.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Hydratec Industries NV  vs.  Add Value Fund

Hydratec Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hydratec Industries NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hydratec Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Add Value Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Add Value Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat uncertain basic indicators, Add Value may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Hydratec Industries and Add Value

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

The idea behind Hydratec Industries NV and Add Value Fund 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.