Correlation Between VOLVO B and H+M HEN+MAUUNSPADR

Can any of the company-specific risk be diversified away by investing in both VOLVO B and H+M HEN+MAUUNSPADR 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 VOLVO B and H+M HEN+MAUUNSPADR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VOLVO B UNSPADR and HM HENMAUUNSPADR 15, you can compare the effects of market volatilities on VOLVO B and H+M HEN+MAUUNSPADR 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 VOLVO B with a short position of H+M HEN+MAUUNSPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of VOLVO B and H+M HEN+MAUUNSPADR.

Diversification Opportunities for VOLVO B and H+M HEN+MAUUNSPADR

0.7

Correlation Coefficient

VOLVO B  H+M HEN+MAUUNSPADR

Poor diversification

The 3 months correlation between VOLVO and H+M is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding VOLVO B UNSPADR and HM HENMAUUNSPADR 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H+M HEN+MAUUNSPADR and VOLVO B 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 VOLVO B UNSPADR are associated (or correlated) with H+M HEN+MAUUNSPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H+M HEN+MAUUNSPADR has no effect on the direction of VOLVO B i.e., VOLVO B and H+M HEN+MAUUNSPADR go up and down completely randomly.

Pair Corralation between VOLVO B and H+M HEN+MAUUNSPADR

Assuming the 90 days trading horizon VOLVO B UNSPADR is expected to generate 1.05 times more return on investment than H+M HEN+MAUUNSPADR. However, VOLVO B is 1.05 times more volatile than HM HENMAUUNSPADR 15. It trades about 0.06 of its potential returns per unit of risk. HM HENMAUUNSPADR 15 is currently generating about 0.01 per unit of risk. If you would invest  2,260  in VOLVO B UNSPADR on April 24, 2025 and sell it today you would earn a total of  160.00  from holding VOLVO B UNSPADR or generate 7.08% return on investment over 90 days.

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

VOLVO B UNSPADR  vs.  HM HENMAUUNSPADR 15

VOLVO B UNSPADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VOLVO B UNSPADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, VOLVO B may actually be approaching a critical reversion point that can send shares even higher in August 2025.

H+M HEN+MAUUNSPADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days HM HENMAUUNSPADR 15 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, H+M HEN+MAUUNSPADR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VOLVO B and H+M HEN+MAUUNSPADR

The main advantage of trading using opposite VOLVO B and H+M HEN+MAUUNSPADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VOLVO B position performs unexpectedly, H+M HEN+MAUUNSPADR 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 H+M HEN+MAUUNSPADR will offset losses from the drop in H+M HEN+MAUUNSPADR's long position.

The idea behind VOLVO B UNSPADR and HM HENMAUUNSPADR 15 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 Transaction History module to view history of all your transactions and understand their impact on performance.