Correlation Between Investor and Hexagon AB

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

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

Diversification Opportunities for Investor and Hexagon AB

0.64

Correlation Coefficient

Investor  Hexagon AB

Poor diversification

The 3 months correlation between Investor and Hexagon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Hexagon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon AB and Investor 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 Investor AB ser are associated (or correlated) with Hexagon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon AB has no effect on the direction of Investor i.e., Investor and Hexagon AB go up and down completely randomly.

Pair Corralation between Investor and Hexagon AB

Assuming the 90 days trading horizon Investor is expected to generate 11.22 times less return on investment than Hexagon AB. But when comparing it to its historical volatility, Investor AB ser is 1.61 times less risky than Hexagon AB. It trades about 0.02 of its potential returns per unit of risk. Hexagon AB is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  9,146  in Hexagon AB on May 7, 2025 and sell it today you would earn a total of  1,484  from holding Hexagon AB or generate 16.23% return on investment over 90 days.

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

Investor AB ser  vs.  Hexagon AB

Investor AB ser

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Investor AB ser are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Investor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hexagon AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hexagon AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hexagon AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Investor and Hexagon AB

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

The idea behind Investor AB ser and Hexagon 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.