Correlation Between Powercell Sweden and Hexagon Composites

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

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

Diversification Opportunities for Powercell Sweden and Hexagon Composites

0.31

Correlation Coefficient

Powercell Sweden  Hexagon Composites

Weak diversification

The 3 months correlation between Powercell and Hexagon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Powercell Sweden and Hexagon Composites ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon Composites ASA and Powercell Sweden 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 Powercell Sweden are associated (or correlated) with Hexagon Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon Composites ASA has no effect on the direction of Powercell Sweden i.e., Powercell Sweden and Hexagon Composites go up and down completely randomly.

Pair Corralation between Powercell Sweden and Hexagon Composites

Assuming the 90 days trading horizon Powercell Sweden is expected to generate 1.12 times more return on investment than Hexagon Composites. However, Powercell Sweden is 1.12 times more volatile than Hexagon Composites ASA. It trades about 0.09 of its potential returns per unit of risk. Hexagon Composites ASA is currently generating about -0.02 per unit of risk. If you would invest  2,714  in Powercell Sweden on April 22, 2025 and sell it today you would earn a total of  516.00  from holding Powercell Sweden or generate 19.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Powercell Sweden  vs.  Hexagon Composites ASA

Powercell Sweden

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Powercell Sweden are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Powercell Sweden unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hexagon Composites ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hexagon Composites ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Hexagon Composites is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Powercell Sweden and Hexagon Composites

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

The idea behind Powercell Sweden and Hexagon Composites ASA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.