Correlation Between American Commerce and Alfa Laval
Can any of the company-specific risk be diversified away by investing in both American Commerce and Alfa Laval 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 American Commerce and Alfa Laval into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Commerce Solutions and Alfa Laval AB, you can compare the effects of market volatilities on American Commerce and Alfa Laval 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 American Commerce with a short position of Alfa Laval. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Commerce and Alfa Laval.
Diversification Opportunities for American Commerce and Alfa Laval
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Alfa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Commerce Solutions and Alfa Laval AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Laval AB and American Commerce 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 American Commerce Solutions are associated (or correlated) with Alfa Laval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Laval AB has no effect on the direction of American Commerce i.e., American Commerce and Alfa Laval go up and down completely randomly.
Pair Corralation between American Commerce and Alfa Laval
Given the investment horizon of 90 days American Commerce Solutions is expected to generate 26.19 times more return on investment than Alfa Laval. However, American Commerce is 26.19 times more volatile than Alfa Laval AB. It trades about 0.04 of its potential returns per unit of risk. Alfa Laval AB is currently generating about 0.06 per unit of risk. If you would invest 0.02 in American Commerce Solutions on August 24, 2024 and sell it today you would lose (0.01) from holding American Commerce Solutions or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Commerce Solutions vs. Alfa Laval AB
Performance |
| Timeline |
| American Commerce |
| Alfa Laval AB |
American Commerce and Alfa Laval Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Commerce and Alfa Laval
The main advantage of trading using opposite American Commerce and Alfa Laval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Commerce position performs unexpectedly, Alfa Laval 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 Alfa Laval will offset losses from the drop in Alfa Laval's long position.| American Commerce vs. Aumann AG | American Commerce vs. Alfa Laval AB | American Commerce vs. Arista Power | American Commerce vs. Atlas Copco AB |
| Alfa Laval vs. Aumann AG | Alfa Laval vs. Arista Power | Alfa Laval vs. Atlas Copco AB | Alfa Laval vs. American Commerce Solutions |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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