Correlation Between Axfood AB and Induction Healthcare
Can any of the company-specific risk be diversified away by investing in both Axfood AB and Induction Healthcare 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 Axfood AB and Induction Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Induction Healthcare Group, you can compare the effects of market volatilities on Axfood AB and Induction Healthcare 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 Axfood AB with a short position of Induction Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Induction Healthcare.
Diversification Opportunities for Axfood AB and Induction Healthcare
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Axfood and Induction is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Induction Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induction Healthcare and Axfood 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 Axfood AB are associated (or correlated) with Induction Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induction Healthcare has no effect on the direction of Axfood AB i.e., Axfood AB and Induction Healthcare go up and down completely randomly.
Pair Corralation between Axfood AB and Induction Healthcare
Assuming the 90 days trading horizon Axfood AB is expected to generate 0.58 times more return on investment than Induction Healthcare. However, Axfood AB is 1.73 times less risky than Induction Healthcare. It trades about -0.07 of its potential returns per unit of risk. Induction Healthcare Group is currently generating about -0.29 per unit of risk. If you would invest 23,840 in Axfood AB on September 13, 2024 and sell it today you would lose (265.00) from holding Axfood AB or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Axfood AB vs. Induction Healthcare Group
Performance |
| Timeline |
| Axfood AB |
| Induction Healthcare |
Axfood AB and Induction Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Induction Healthcare
The main advantage of trading using opposite Axfood AB and Induction Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, Induction Healthcare 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 Induction Healthcare will offset losses from the drop in Induction Healthcare's long position.| Axfood AB vs. UNIQA Insurance Group | Axfood AB vs. Southern Copper Corp | Axfood AB vs. European Metals Holdings | Axfood AB vs. Sabre Insurance Group |
| Induction Healthcare vs. Waste Management | Induction Healthcare vs. Tatton Asset Management | Induction Healthcare vs. Bankers Investment Trust | Induction Healthcare vs. Liontrust Asset Management |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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