Correlation Between AAC Clyde and Hufvudstaden
Can any of the company-specific risk be diversified away by investing in both AAC Clyde and Hufvudstaden 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 AAC Clyde and Hufvudstaden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC Clyde Space and Hufvudstaden AB, you can compare the effects of market volatilities on AAC Clyde and Hufvudstaden 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 AAC Clyde with a short position of Hufvudstaden. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC Clyde and Hufvudstaden.
Diversification Opportunities for AAC Clyde and Hufvudstaden
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AAC and Hufvudstaden is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding AAC Clyde Space and Hufvudstaden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hufvudstaden AB and AAC Clyde 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 AAC Clyde Space are associated (or correlated) with Hufvudstaden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hufvudstaden AB has no effect on the direction of AAC Clyde i.e., AAC Clyde and Hufvudstaden go up and down completely randomly.
Pair Corralation between AAC Clyde and Hufvudstaden
Assuming the 90 days trading horizon AAC Clyde Space is expected to generate 4.58 times more return on investment than Hufvudstaden. However, AAC Clyde is 4.58 times more volatile than Hufvudstaden AB. It trades about 0.27 of its potential returns per unit of risk. Hufvudstaden AB is currently generating about 0.01 per unit of risk. If you would invest 3,485 in AAC Clyde Space on September 1, 2024 and sell it today you would earn a total of 1,315 from holding AAC Clyde Space or generate 37.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC Clyde Space vs. Hufvudstaden AB
Performance |
| Timeline |
| AAC Clyde Space |
| Hufvudstaden AB |
AAC Clyde and Hufvudstaden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC Clyde and Hufvudstaden
The main advantage of trading using opposite AAC Clyde and Hufvudstaden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC Clyde position performs unexpectedly, Hufvudstaden 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 Hufvudstaden will offset losses from the drop in Hufvudstaden's long position.| AAC Clyde vs. GomSpace Group AB | AAC Clyde vs. Eolus Vind AB | AAC Clyde vs. Fingerprint Cards AB | AAC Clyde vs. SaltX Technology Holding |
| Hufvudstaden vs. Fabege AB | Hufvudstaden vs. Castellum AB | Hufvudstaden vs. Wallenstam AB | Hufvudstaden vs. Fastighets AB Balder |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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