Correlation Between AAK AB and Castellum
Can any of the company-specific risk be diversified away by investing in both AAK AB and Castellum 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 AAK AB and Castellum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAK AB and Castellum AB, you can compare the effects of market volatilities on AAK AB and Castellum 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 AAK AB with a short position of Castellum. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAK AB and Castellum.
Diversification Opportunities for AAK AB and Castellum
Very poor diversification
The 3 months correlation between AAK and Castellum is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding AAK AB and Castellum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castellum AB and AAK 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 AAK AB are associated (or correlated) with Castellum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castellum AB has no effect on the direction of AAK AB i.e., AAK AB and Castellum go up and down completely randomly.
Pair Corralation between AAK AB and Castellum
Assuming the 90 days trading horizon AAK AB is expected to under-perform the Castellum. But the stock apears to be less risky and, when comparing its historical volatility, AAK AB is 1.3 times less risky than Castellum. The stock trades about -0.36 of its potential returns per unit of risk. The Castellum AB is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 13,470 in Castellum AB on August 25, 2024 and sell it today you would lose (965.00) from holding Castellum AB or give up 7.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAK AB vs. Castellum AB
Performance |
| Timeline |
| AAK AB |
| Castellum AB |
AAK AB and Castellum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAK AB and Castellum
The main advantage of trading using opposite AAK AB and Castellum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAK AB position performs unexpectedly, Castellum 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 Castellum will offset losses from the drop in Castellum's long position.| AAK AB vs. Castellum AB | AAK AB vs. Tele2 AB | AAK AB vs. Investor AB ser | AAK AB vs. Kinnevik Investment AB |
| Castellum vs. Fastighets AB Balder | Castellum vs. Fabege AB | Castellum vs. Wihlborgs Fastigheter AB | Castellum vs. AB Sagax |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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